Peer-to-Peer File Sharing and Secondary Liability in Copyright Law, Edward Elgar, 2009, 321 p

Peer-to-Peer File Sharing and SecondaryLiability in Copyright Law

Peer-to-Peer FileSharing and SecondaryLiability in CopyrightLaw

Edited by

Alain StrowelProfessor, Facultés Universitaires Saint-Louis, Brussels andUniversity of Liège, Avocat, Belgium

Edward ElgarCheltenham, UK • Northampton, MA, USA

© Alain Strowel 2009

All rights reserved. No part of this publication may be reproduced, stored in aretrieval system or transmitted in any form or by any means, electronic, mechanicalor photocopying, recording, or otherwise without the prior permission of thepublisher.

Published byEdward Elgar Publishing LimitedThe Lypiatts15 Lansdown RoadCheltenhamGlos GL50 2JAUK

Edward Elgar Publishing, Inc.William Pratt House9 Dewey CourtNorthamptonMassachusetts 01060USA

A catalogue record for this bookis available from the British Library

Library of Congress Control Number: 2009922756

ISBN 978 1 84720 562 9

Typeset by Cambrian Typesetters, Camberley, SurreyPrinted and bound in Great Britain by MPG Books Ltd, Bodmin, Cornwall

Contents

List of contributors viTable of cases x

Introduction: peer-to-peer file sharing and secondary liabilityin copyright law 1Alain Strowel

1 Liability of users and third parties for copyright infringementson the Internet: overview of international developments 12Allen N. Dixon

2 Legal issues in peer-to-peer file sharing, focusing on themaking available right 43Michael Schlesinger

3 Secondary liability for copyright infringement with regard tohyperlinks 71Alain Strowel and Vicky Hanley

4 Copyright control v compensation: the prospects for exclusiverights after Grokster and Kazaa 110Jane C. Ginsburg

5 Global networks and domestic laws: some private internationallaw issues arising from Australian and US liability theories 124Graeme W. Austin

6 A bipolar copyright system for the digital network environment 148Alexander Peukert

7 Sharing out online liability: sharing files, sharing risks andtargeting ISPs 196Robert Clark

8 A reverse notice and takedown regime to enable public interestuses of technically protected copyrighted works 229Jerome H. Reichman, Graeme B. Dinwoodie andPamela Samuelson

Index 305

v

Contributors

Graeme W. Austin is the J. Byron McCormick Professor of Law at theUniversity of Arizona. He holds a J.S.D. and LL.M. from ColumbiaUniversity and is a graduate of Victoria University of Wellington. Born inNew Zealand, where he practiced commercial law and was a senior lecturerat the University of Auckland, his work focuses on cross-border intellectualproperty issues. He recently served as advisor to the American Law InstituteProject on Intellectual Property, Principles Governing Jurisdiction, Choiceof Law, and Judgments in Transnational Disputes, and is co-author ofInternational Intellectual Property: Law and Policy (2nd ed.). He alsoteaches regularly as a visiting professor at the University of Melbourne,Australia.

Robert Clark is an Associate Professor of Law at the School of Law,University College Dublin. Since 1992, he has been the Irish national repre-sentative in the European Commission Copyright Experts Group and is amember of the Irish government’s Internet Advisory Board and the PatentOffice Users Council. He is the founder and chair of the Irish ALAI group(1996). Since 1999, Robert has been employed as a consultant to the leadingIrish law firm Arthur Cox where he specialises in intellectual property andinformation technology law. He is the co-author (with Shane Smyth) ofIntellectual Property Law in Ireland, now in its second edition, and is theauthor of Irish Copyright and Design Law, both of which are currentlypublished by Tottel.

Graeme B. Dinwoodie is Professor of Law, Associate Dean, and Director ofthe Program in Intellectual Property Law at Chicago-Kent College of Law.He also holds a Chair in Intellectual Property Law at Queen Mary College,University of London. Professor Dinwoodie has authored numerous articleson intellectual property law. He holds a First Class Honours LL.B. degreefrom the University of Glasgow, an LL.M. from Harvard Law School, wherehe was a John F. Kennedy Scholar, and a J.S.D. from Columbia Law School,where he was a Burton Fellow. He was elected to membership in theAmerican Law Institute in 2003.

Allen N. Dixon is a lawyer who has represented the intellectual propertyinterests of the technology and traditional content industries in various

vi

capacities for more than 20 years. He has served in General Counsel andAssistant General Counsel positions in Asia, the US and Europe. AsEuropean counsel and partner at Covington & Burling, he was the seniorlegal advocate of the business software sector on intellectual propertymatters in Europe in the late 1990s, acting as counsel to the BusinessSoftware Alliance and individual software companies. From 2000 to 2005 hewas General Counsel and Executive Director of the international recordingindustry association IFPI. Since 2005, he has been the principal and manag-ing director of International Intellectual Property & Technology Consulting.

Jane C. Ginsburg is the Morton L. Janklow Professor of Literary andArtistic Property Law at Columbia University School of Law, and Co-Director of its Kernochan Center for Law, Media and the Arts. WithProfessor Sam Ricketson, she is the co-author of International Copyrightand Neighbouring Rights: The Berne Convention and Beyond (OxfordUniversity Press, 2006). Other books include Foundations of IntellectualProperty (Foundation Press, 2004) with Professor Robert P. Merges, andIntellectual Property Stories (Foundation Press, 2005) with ProfessorRochelle Dreyfuss. With Professor Dreyfuss and Professor FrançoisDessemontet, she is also a co-reporter for the American Law Institute Projecton Intellectual Property: Principles Governing Jurisdiction, Choice of Lawand Judgments in Transnational Disputes.

Vicky Hanley is a UK associate in the Brussels office of Covington &Burling LLP. Her practice involves legislative advocacy and advising onpolicy-making and legislative processes. Miss Hanley has recently advisedleading multinational companies on regulatory issues in areas includingintellectual property and telecommunications, including the current reviewof the electronic communications regulatory framework. She is also anEdmund Davies Scholar of The Honourable Society of Gray’s Inn (2002)and a member of the European Bar Group. Recent publications include‘Last-ditch attempt to improve the EU patent system’ in the Journal ofIntellectual Property Law & Practice (September 2007), which she co-authored with Alain Strowel.

Alexander Peukert is Associate Professor of Civil Law, Commercial Lawand Intellectual Property Law at the Johann-Wolfgang-Goethe UniversityFrankfurt/Main, Cluster of Excellence ‘The Formation of NormativeOrders’. He graduated in law (1998) and earned his doctorate in law (1999)from the University of Freiburg. After his second state examination (2001),he worked at a law firm in Berlin, specializing in IP and media law. From2002 to 2008, he was a senior research fellow at the Max Planck Institute for

Contributors vii

Intellectual Property, Competition and Tax Law in Munich. In 2008, heobtained his postdoctoral lecture qualification from the University ofMunich.

Jerome H. Reichman is the Bunyan S. Womble Professor of Law at DukeLaw School. He has written and lectured widely on the diverse aspects ofintellectual property law, including comparative and international intellec-tual property, and the connection between intellectual property and interna-tional trade laws. In collaboration with Keith Maskus, he recently publishedInternational Public Goods and Transfer of Technology Under a GlobalizedIntellectual Property Regime (Cambridge Press, 2005). He is a consultant tonumerous intergovernmental and nongovernmental organizations, a memberof the Board of Editors for the Journal of International Economic Law, andalso of the Scientific Advisory Board of il Diritto di Autore (Rome).

Pamela Samuelson is the Richard M. Sherman ’74 Distinguished Professorof Law and Information at the University of California at Berkeley, aDirector of the Berkeley Center for Law & Technology and an advisor to theSamuelson High Technology Law & Public Policy Clinic at Boalt Hall. Sheis a Fellow of the Association for Computing Machinery (ACM), aContributing Editor of Communications of the ACM, a past Fellow of theJohn D. & Catherine T. MacArthur Foundation, and an Honorary Professorof the University of Amsterdam.

Michael Schlesinger is Of Counsel to Greenberg Traurig. His practicefocuses on intellectual property with an emphasis in international copyrightlaw and trademark law. Mr Schlesinger represents the InternationalIntellectual Property Alliance (IIPA) in worldwide copyright legislation andenforcement reform efforts, as well as government affairs and trade-relatedaspects of intellectual property rights. His regional focus is on Asia, theMiddle East and Africa. He works with governments on implementingemerging standards of IP protection, as well as compliance with interna-tional intellectual property and trade agreements.

Alain Strowel is a professor at the Saint-Louis University in Brussels, theUniversity of Liège and the Catholic University of Brussels-Leuven, where heteaches copyright, design law and media law. A member of the Brussels Barsince 1988, he graduated in law (1983) and obtained a Ph. D. in law (1992)from the University of Louvain-la-Neuve. Prior to joining the US firmCovington & Burling in 2001, where he concentrates on the IP issues in rela-tion to IT, he worked in the Brussels IP section of the Dutch firm NautaDutilh.He has authored numerous articles and several books, including Droit d’auteur

viii Peer-to-peer file sharing and secondary liability in copyright law

et copyright (LGDJ and Bruylant, 1993) and Droit d’auteur et numérique:logiciels, bases de données, multimédia (Bruylant, 2001) with EstelleDerclaye. He has also edited various books including Of Authors andOrigins (Clarendon Press, 1994) with Brad Sherman, and Droit d’auteur etliberté d’expression (Larcier, 2006) with Fr. Tulkens.

Contributors ix

Table of cases

x

A&M Records, Inc. v Napster, 239F.3d 1004 (9th Cir. 2001) 6, 16,31, 58, 62, 63, 66, 112–13, 114,208, 255, 258, 259–61, 263,264–5, 283

A&M Records, Inc. v Napster, 284F.3d 1091 (2002) 208, 209, 211

A&M Records, Inc. v Napster, 114F. Supp. 2d 896, aff’d 239 F.3d 22, 245, 259

A&M Records, Inc. v Abdallah, 948F. Supp. 1449 (C.D. Cal. 1996)245

A&M Records, Inc. v Napster 2000WL 573136, at *3 (N.D. Cal.2000) 259–60, 267

Abkco Music & Records Inc. vMusic Collection InternationalLtd, [1995] RPC 657 132

Adelaide Corporation v APRA(1920) 40 CLR 481, approved inMoorhouse (1975) 133 CLR 1and Cooper (2005) IPR 40917, 210, 212

Aimster Copyright Litigation, 334F.3d 643 (2d. Cir. 2003)39, 40, 255, 258, 261, 264–5,268, 283

Anton Pillar KG v ManufacturingProcesses Ltd, [1976] Ch 55(CA); [1976] 1 All ER 779;[1976] 2 WLR 162 120

Arsenal Football Club plc v EliteSports [2003] FSR 26 215

Ashworth Hospital Authority v

MGN Ltd [2002] 1 WLR 2003215

Asia Media Inc. et al v Yang, No.2002KAHAP77 (Suwon D.Court, Seongnam Branch, FirstCiv. Dep’t. 9 July 2002)25–7

AT&T Corp. v City of Portland, 216F33d 871 (9th Cir. 1999)153

Atari Games Corp. v Nintendo ofAm., Inc., 975 F.2d 832 (Fed. Cir.1993) 275, 276

Atherton v DPP [2006] 2 ILRM 153220

Atlantic v Anderson (S.D. Tex.2008) 66

Atlantic v Brennan, Civil No.3:07cv232 (JBA) (13 February2008, D. Conn) 67

Australian Tape ManufacturersAssociation Ltd vCommonwealth of Australia(1993) 176 CLR 480 (High CourtAus.) 122

Bahleida v Santa (2003) 233 (4th)382 203

Baker v Selden, 101 US 99 (1880)275–7

Baker-Bauman v Walker, 2007 WL1026436 137

Bidzerk LLC v Smith, 2007 WL3119445 (D.S.C.) 88

BMG Canada Inc. v John Doe, 2004FC 488 (Canada Fed. Ct. 31

March 04), reversed and aff’d inpart, 2000 FCA 193 (Canada Ct.App. 19 May 2005) 20, 55

BMG Canada Inc. v John Doe(2005) 252 DLR (4th) 726214, 216, 217

BMG Records v Heise ZeitschriftenVerlag, OLG München, 29 U2887/05, 28 July 2005 (21 O3220/05 Landgericht München I)106–7

Bonito Boats, Inc. v Thunder CraftBoats, Inc., 489 US 141 (1989) 273

Boosey & Hawkes MusicPublishers, Ltd v Walt Disney Co,145 F 3d 481 (2nd Cir, 1998)133

British Leyland Motor Co. vArmstrong Patents [1986] 1 AllER 850 (HL) (UK) 297

Bruvik v EMI Norsk SA [2005]ECDR 331 (Norway) 204

Bulova Watch Co v Steele, 194 F 2d567 (5th Cir, 1952) 139

BUMA/STEMRA v Kazaa BV, No.C02/186HR (Netherlands S. Ct.19 December 2003) [2004]EDCR 183 25, 41, 111, 119–20,121–2, 209

Bunt v Tilley, [2006] EWHC 407QB; [2007] ECDR 320 205–6,224, 227

Campbell v Acuff-Rose Music, Inc.,510 US 569 (1994) 85, 263

Canadian Association of InternetProviders v Society of Composersand Music Publishers of Canada(SOCAN), Copyright Board ofCanada (1999) 1 CPR (4th) 417:Federal Court of Appeal, (2002)215 DLR (4th) 118 200

Canadian Association of InternetProviders v Society of Composersand Music Publishers of Canada(SOCAN), Supreme Court ofCanada, (2004) 240 DLR (4th)193 201–3, 211

Canon Kabushiki Kaisha v GreenCartridge Co., [1997] AC 728(PC) 297

Capitol v Thomas (D.Minn. Deluth2007), Civil File No. 06 1497(MJD/RLE) 67–8

Carlton Film Distributors Ltd vMGN Ltd [2002] FSR 47215

CBS Inc. v Ames Records and Tapes[1982] Ch 91 210

CBS Songs Ltd v AmstradConsumer Electronics plc.,[1988] 1 AC 1013 (H.L.)17, 18, 122, 126, 210, 211

CCH Canadian Ltd. v Law Societyof Upper Canada, [2004] 1 S.C.R.339, 2004 SCC 13 55, 173, 203

Chamberlain Group, Inc v. SkylinkTechs., Inc., 381 F.3d 1178 (Fed.Cir. 2004) 167, 230, 251, 255,256, 257, 269–74, 275, 276, 283

CHC Software Care v Hopkins andWood [1993] FSR 241 215

Church of Spiritual Technology vDataweb B.V., Rb (The Hague, 9June 1999, Court of Appeal, TheHague, 4 September 2003) [2004]ECDR 258 99, 199, 215

Cineplay Records Co Ltd v HongKong Broadband Network Ltd[2006] 1 HKLRD 255 217

CNIL, 24 October 2005 219Cogley v RTE [2005] 2 ICRH 529

215

Table of cases xi

Columbia Pictures Industries Inc. vFrankl (2004) 36 CPR (4th) 342210

Columbia Pictures Industries Inc. vGaudreault [2006] FCA 29210

Cooper v Universal Music AustraliaPty. Ltd., [2006] FCAFC 187(Fed. Ct. Full Court Appeal, 18December 2006) 22, 23, 53–4,59–60, 68, 125, 128–30

Copiepresse v Google Inc., Trib. 1stInstance Brussels, 13 Febr. 2007[2007] ECDR 5 78–9, 87

CoStar Group, Inc. v LoopNet, Inc.,373 F.3d 544 (4th Cir. 2004)240–41

Cubby v Compuserve 776 F Supp135 (1991) 205, 235

Curb v MCA Records Inc, 898 FSupp 586 (MD Tenn, 1995)136

DVD Copy Control Ass’n vMcLaughlin, No. CV 786804,2000 WL 48512 (Cal. Super. Ct.21 January 2000) 104–5

Eldred v Ashcroft, 123 S.Ct. 769179

Elektra Entertainment Group Inc. etal v Barker, Case No. 7:05-cv-07340-KMK (S.D.N.Y.) (Opinionand Order, 31 March 2008)65–6

Elektra Records Co. v GemElectronic Distributors, Inc., 360F. Supp. 821 (E.D.N.Y. 1973)111–12

Ellison v Robertson, 189 F. Supp.2d1051 (C.D. Cal. 2002) Rev’d inpart 357 F. 3d 1072 (9th Cir.2004) 22

EMI Records (Ireland) Ltd and

Others v Eircom Ltd and BTCommunications Ireland Ltd[2006] ECDR 40 217, 219

Expediters International ofWashington Inc v Direct LineCargo Management Services Inc,995 F Supp 468 at 477 (DNJ,1998) 136

EzPeer Global Digital TechnologyCo., Ltd., 2002 Zhen Zi No.10786 and No. 4559 (Shih-Lin(Taiwan) Dist. Ct. (30 June2005)) 27, 61

F Hoffmann-LaRoche, Ltd vEmpagran SA 417 F 3d 1267 (DCCir, 2005) 144, 145

Falcon v Famous Players Film Co[1926] 2 KB 474 17, 126

Feist Publ’ns, Inc. v Rural Tel. Serv.Co., 499 US 340 (1991) 80

Ferris v Frohman, 223 US 424(1912) 134

Futuredontics, Inc. v AppliedAnagramics, Inc., 45 U.SP.G.2d(BNA) 2005, 1998 US Dist.LEXIS 2265 (C.D. Cal. 1998)81

General Association of ProfessionalJournalists of Belgium v. CentralStation (Brussels Court of FirstInstance, 16 October 1996;Brussels Court of Appeals, 28October 1997) 82

Go East Entertainment Co. Ltd. vBeijing Alibaba Information andTechnology Co. Ltd., Civ. No(2007) 02627 Er Zhong Min ChuZi (Beijing No. 2 IntermediatePeople’s Court, 24 Apr. 2007)23, 97

Godfrey v Demon Internet, [2001]QB 201 205

xii Peer-to-peer file sharing and secondary liability in copyright law

Gold Label Entertainment Ltd. vBeijing Baidu NetworkInformation Scien-tech Co., Ltd.,Civ. No. (2005) 7965 Yi ZhongMin Chu Zi (Beijing No. 1Intermediate People’s Court, 17November 2006) 23, 96–7

Gormley v EMI [1999] 1 ICRM 154199

Haughey v Moriarty [1999] 3 IR 1215

Heinz Wattie’s Ltd v SpantechProperty (2005) 67 IPR 666 210

Hi Bit Software GmbH v AOLBertelsmann Online GmbH,[2001] ECDR 375 207, 212

HKSAR v Chan Nai-Ming, FACC0003/2007, 18 May 2007 56

Hotaling v Church of Jesus Christ ofthe Latter-Day Saints, 118 F.3d199 (4th Cir. 1997) 64–5

IFPI Belgium v Beckers, A.R.K. No.99/594/C (Antwerp Court, 21December 1999) confirmed byAntwerp Court of Appeal 21 June2001 RG 99/23830 23, 92

IFPI Danmark v. Tele2 A/S, CaseNo. FI-15124/2006 (CopenhagenCity Ct., 25 October 2006)31

IFPI v Belgacom Skynet, Court ofAppeals, Brussels, 13 February2001 reversing Court ofCommerce, Brussels, 2November 1999 99–101

IFPI v T. Olsson, unreported, no. B1009-99 (Göta, Court of Appeals1999) (Swe.), unreported, no. B824-99, (Tingsrätt Skövde 1999)(Swed.), unreported, no. B 413-00, Stockholm Supreme Court2000) 89–91

Imax Corp. v Showmax Inc., 2000A.C.W.S.J. LEXIS 47376 (Fed.Ct. Jan. 18, 2000) (Can.) 81

In re Yang and Yang, Docket 2003No. 4296 (Seoul D. Ct., Crim. Ct.No. 5, 12 January 2005) 26

In the Koursk, [1924] All ER Rep168 18

Infabrics Ltd v Jaytex Shirt Co[1978] FSR 451 223

Intellectual Reserve Inc. v UtahLighthouse Ministry Inc., 75 F.Sapp. 2d 1290 (D. Utah 1999)89, 90

Itar-Tass Russian News Agency vRussian Kurier Inc, 153 F 3d 82(2nd Cir, 1998) 135

JASRAC v MMO Japan (TokyoDistrict Court, 29 January 2003),H17.3.31, Tokyo Dist. Ct. No. 16Ne 446 57

Jones v University of Warwick[2003] 3 All ER 760 220

Kalem Co. v. HarperBrothers, 222U.S. (S. Ct. 1911) 36, 243

Kazaa v Buma/Stemra, No. 1370/01(Amsterdam Ct. of Appeal, 28March 2002) 24–5, 37

Kazaa v Buma/Stemra, No. KG01/2264 OdC (Amsterdam Ct. ofJustice, 29 November 2001)24–5

Kelly v Arriba Soft Corp. 77 F.Supp. 2d 1116 (C.D. Cal. 1999)79, 84–7, 102

Kelly v Arriba Soft Corp. 280 F 3d934 (9th Cir, 2002), withdrawn9th Cir 3 July 2003 86

Kelly v Arriba Soft Corp. 336 F 3d811 (9th Cir, 2003) 86, 209

Kennedy v Ireland [1987] IR 587215, 220

Table of cases xiii

KODA v Lauritzen and Egeberg[2002] ECDR 25 (Denmark)204, 208–9

KODA, NCB, Dansk Artist Forbund,Dansk Musiker Forbund & IFPIDenmark, Case Nos. V.L. B-1943-99 and V.L. B-2089-99(High Ct. of Justice, WesternDiv., 20 April 2001) 23, 74,91–2

Korean Assn. of PhonogramProducers v Soribada Co. Inc.,Case No. 2002 Kahab 77, SuwonDist. Ct., 9 July 2002), aff’dSeongwan [sp] Branch Ct. (Feb.14, 2003), aff’d in part, SeoulHigh Court (12 June 2005), CaseNo. 2003 11a2 1140 (Soribada I)58–9

Korean Assn. of PhonogramProducers v Soribada Inc.,Docket No. 2004 Ka Hap 3491(Seoul D. Ct., Civ. Ct. No. 50, 29August 2005) 26, 41, 58

Koubareli v Volotas and Forthnet SA[2003] ECDR 19 207

Krog (2006) 22 CLSR 73 204Kuro Fashion Now Ltd., 92 Suit No.

2146 (Taipei (Taiwan) Dist. Ct.)27–8

Landgericht München I, 7 October2004, 7 O 18165/03 82

Lexmark Int’l, Inc. v Static ControlComponents, Inc., 253 F. Supp.2d 943 (E.D. Ky. 2003) 270,276

Lexmark Int’l, Inc. v Static ControlComponents, Inc., 387 F.3d 522(6th Cir. 2004) 256, 269–71

London-Sire v Does, Case No.04cv12434-NG (D. Mass 2008)66, 67

Los Angeles News Service v ReutersTelevision International, Ltd, 149F 3d 987 (9th Cir, 2005) 136

Luck’s Music Library, Inc vGonzales 407 F 3d 1262 (DC Cir,2005) 145

MAI Systems Corp. v PeakComputer, Inc., 991 F.2d 511 (9thCir. 1993) 237

Mars UK v Technowledge Ltd.,[2000] FSR 138 (Ch) (UK) 297

McBee v Delica, 417 F 3d 107(2005) 139

Metro-Goldwyn-Mayer Studios Inc.v Grokster, Ltd., 259 F. Supp. 2d(C.D. Cal 2003) aff’d 380 F.3d1154, 1164 (9th Cir. 2004)35–6, 113, 114, 115, 116–17,118–19, 120, 121–2, 133–4, 135,137, 140, 141, 143–4, 146, 147,153, 177, 179–80, 182, 204, 209,262–3, 265–6, 283

MGM Studios, Inc. v Grokster Ltd.,125 S. Ct. 2764 (2005) 1, 2, 6,15–16, 31, 33, 38, 40, 41, 62,63–4, 110–11, 114, 118, 125, 141,142, 152, 166, 177, 180, 182,193, 194, 208, 244, 246, 255–6,257, 258, 260, 261–2, 266, 268

Microsoft v AT&T Corp., 127 S Ct1746 (2007) 138

Mitsui & Co. Ltd v NexenPetroleum UK Ltd [2005] EWHC625 (Ch) 215

Monsanto Co. v McFarling, 363 F.3d1331 (Fed. Cir. 2004) 276

Montres Rolex v Ricardo, I ZR304/01 (Germany Supreme CivilCt (BGH), 11 March 2004) 30

Moorhouse v University of NewSouth Wales (1975) 133 CLR 1210

xiv Peer-to-peer file sharing and secondary liability in copyright law

Motown Records Co. v TheresaDePietro, Civ. No. 04-CV-2246(16 February 2007) 66

Musak Corp. v Composers, Authorsand Publishers Assoc. (Canada),[1953] 2.SCR, 182 84

New York Times Co. v Tasini 533US 483, 488 (2001) 47, 65

News Datacom Ltd v Lyons [1994]1 ILRM 450 199

Nippon Columbia Co. Ltd et al. vYugen Kaisha Nippon MMO2002 (Wa) Case No. 4249 (TokyoDistrict Court, 29th CivilDivision, interlocutory judgement29 January 2003, damagesdecision 17 December 2003) 25

Nominet UK v Diverse Internet(2004) 63 IPR 543 (WesternAustralia) 204

Norwich Pharmacal v Customs andExcise Commissioners [1974] AC13 215–17, 219, 223

Online Policy Group v Diebold, Inc.,337 F. Supp. 2d 1195 (N.D. Cal.2004) 240

Pearce v Ove Arup Partnership Ltd[2000] Ch 403 133

Perathoner v S. Joseph Société Free[2003] ECDR 76 199, 207, 215

Perfect 10, Inc v Amazon.com, Inc.,508 F. 3d 1146 (9th Cir. 16 May2007) 16, 22–3, 67, 87, 96, 103

Perfect 10, Inc v CCBill LLC, 481F.3d 751 (9th Cir. 2007)16, 239

Perfect 10, Inc v Google Inc., 416 FSupp 2d 828 (CD Cal, 3006) 103

Perfect 10, Inc v Visa InternationalService Ass’n, No. 05-15170 (9thCir. 3 Jul. 2007) 16

Performing Right Society Ltd. vMitchell and Booker, Ltd, [1924]KB 762 18

Pharmacal v Customs and ExciseCommissioners, [1974] AC 13214–15

Phonefile v Startsiden (Oslo DistrictCourt, Norway, 29 October 2003)97–8

Playboy Enterprises, Inc v Frena,839 F. Supp. 1552 (M.D.Fla.1993) 47, 237

Playboy-Fotos, LandgerichtMünchen I, 7 October 2004, 7 O18165/03 82

Polydor Ltd v Brown, No. HC05C02035, [2005] EWCH 3191(Ch) (UK High Ct. ChanceryDivision, 18 November 2005)20

Princeton Univ. Press v Mich.Document Serv., 99 F.3d 1381,1391 (6th Cir. 1996), cert. denied,520 US 1156 (1997) 296

Productores de Musica de EspanaPromusicae de Espana Sau CaseC – 275/06: Summarised at[2007] ECDR 390 221

Prosperetti [2007] Ent. L.R. 280218, 227

Public Performance of MusicalWorks, Copyright Board ofCanada, 27 October 199983–4

Public Prosecutor v Olssen [2001]EDCR 303 209

Publishing Corp. v Columbia ArtistsManagement, Inc., 443 F.2d (2dCir. 1971) 15

Quality King Distributors Inc vL’Anza Research InternationalInc, 523 US 135(1998) 125

Table of cases xv

RCA Corp. v. John Fairfax and SonsLtd., [1981] 1 NSWLR 251(Australia) 40

RCA Records v A-Fast Systems,Inc., 594 F. Supp. 335 (SDNY1984) 111

Recording Indus. Ass’n of Am. vVerizon Internet Servs., Inc., 351F.3d 1229 (D.C. Cir. 2003)239

Reform Party of Canada v WesternUnion Insurance Co. (1998) 3CPR (4th) 289 203

Religious Tech. Ctr. (RTC) vNetcom On-Line Commc’nServs., Inc., 907 F. Supp. 1361(N.D. Cal. 1995) 16, 232, 236,237–8, 260, 276, 277

SABAM v SA Scarlet, No. 04/8975A of the General Roll (D. Ct.Brussels 28 June 2007) [2007]ECDR 320 32, 70, 226

SAIF v Google France and GoogleInc., TGI Paris, 20 May 2008103–4

Schöner Wetten, BGH 1 April 2004– 1 ZR 317/01 and BGH 18October 2007 – 1ZHR 102/05107

SCPP v Anthony G., No.0504090091 (Tribunal de GrandeInstance de Paris, 8 December2005) 20

Sega Enters. Ltd v Accolade, Inc.,977 F.2d 1510 (9th Cir. 1993)274, 275

Shapiro, Bernstein & Co. v H.L.Green Co., 316 F.2d (2d Cir.1963) 15

Sheldon v Metro-Goldwyn PicturesCorp, 106 F 2d 45 (2nd Cir,1939), affirmed on other grounds:309 US 390 (1940) 131, 136

Shetland Times Ltd v Jonathan Willsand Another, 1997 SLT 669 (24October 1996) 77, 82

Sinchon Music Co. Ltd. v Yang,Docket No. 2003 Na 21140(Seoul High Ct., Civ. Ct. No. 4,12 January 2005) 26

Society of Composers, Authors andMusic Publishers of Canada vCanadian Assn. of InternetProviders, 2004 SCC 45, [2004] 2SCR 427 83–4

Sony Corp. of America v. UniversalCity Studios, Inc., 464 U.S. 417(1984) 6, 15, 112, 113–14,115–18, 119, 120, 121, 122, 135,140–41, 142, 143, 211, 212, 236,242–6, 259, 261, 263, 275

Star-Kist Foods, Inc v PJ Rhodes &Co, 769 F 2d 1393 (9th Cir,1985) 139

Steele v Bulova Watch Co, 344 US280 (1952) 139

Stichting BREIN v KPN, No.276747/KG ZA 06-1417 (HagueCt., 5 January 2007) 29, 30

Stichting BREIN v Leaseweb BV,No. 369220/KG ZA 07-850AB/MV (D. Ct. Amsterdam, Civ.Sector, 21 June 2007) 29, 30,38

Stichting BREIN v Techno DesignInternet Programming BV, [2006]ECDR 21 (Ct. App. Amsterdam,5th Civ. Div., 15 June 2006)reversing Techno design ‘InternetProgramming’ BV v BREIN, No.85489/HA ZA 02-992 (D. Ct.Haarlem, 12 May 2004) 24,93–4, 210, 220, 222, 224

Storage Tech. Corp. v CustomHardware Eng’g & Consulting,

xvi Peer-to-peer file sharing and secondary liability in copyright law

Inc., 421 F.3d 1307 (Fed. Cir.2005) 257, 269, 274, 277, 283

Stratton Oakmont v ProdigyServices Co. (1995) 23 MediaL.Rep. 1794, 1995 WL 323710205, 235

Subafilms, Ltd. v MGM-PatheCommunications Co., 24 F.3d1088 (9th Cir.) (en banc), cert.denied, 513 US 1001 (1994)54, 134–5, 136, 145

Supreme Court of Canada, ElectricDespatch Co. of Toronto v BellTelephone (1981) 20 SCR 83202

TDC v IFPI, No. 40/2005 (DenmarkS. Ct., 10 February 2006) 30

Thumbnails bei Google, LG Erfurt,15 March 2007 – 3 O 1108/05,MMR 2007 Heft 6 393 87

Ticketmaster Corp. v Tickets.com,Inc., 54 USP.Q.2d (BNA) 1344(C.D, Cal.2000) 80

TONO v Bruvik, Civil Case No.2004/822 (S. Ct. Norway, 27January 2005) 18–19, 22, 90,92–3

Totalise plc v Motley Fool Ltd andInteractive Investor [2001]EWCA Civ 1897 217

Twentieth Century Music Corp. vAiken, 422 US 151 (1975) 116

UMG Recordings, Inc v MP3.com,Inc., 92F. Supp.2d 349 (S.D.N.Y.2000) 63

Union of French Journalists v. SDVPlurimedia (Strasbourg Court ofGrand Instance, 3 February 1998)82

United Dictionary Co v C MerriamCo, 208 US 260 (1908) 134

United States v Am. Library Ass’n,539 US 194 (2003) 279

United States v Shaffer, 472 UF.3d1219 (10th Cir. 2007) 68

Universal City Studios, Inc. vMulligan [1999] 3 IR 392220

Universal City Studios, Inc. vReimerdes, 111 F Supp. 2d 294,325 (S.D.N.Y. 2000), 82 F. Supp.3d 211 (S.D.N.Y. 2000) 105–6,234, 251, 252, 257, 269–70, 271,272

Universal City Studios, Inc. vCorley, 273 F.3d 429 (2d Cir.2001) 234, 251, 252, 257

Universal Music Australia Pty Ltd vCooper (2005) 150 FCR 81, 65IPR 289 94–6, 99, 126, 208,211, 220, 227

Universal Music Australia Pty Ltd vSharman Licence Holdings Ltd(2005) 220 ALR I [Kazaa]124, 126, 127–8, 143–4, 147

Universal Music Australia Pty Ltd vSharman License Holdings Ltd,[2005] FCA 1242 (5 September2005) 6, 22, 28–9, 31, 38, 40,41, 52, 111, 117, 119–21, 212–13,214

Universal Music GmbH v Rac, No.308 O 273/07 (Hamburg D. Ct.Civ. Div. No. 8, 24 April 2007)30

University of New South Wales vMoorhouse, (1975) 133 CLR 117, 127

Vanity Fair Mills, Inc v T Eaton Co,234 F 2d 633 (2nd Cir, 1956)139

Vault v Quaid Software, 874 F. 2d255 (5th Cir. 1988) 112, 245

Table of cases xvii

xviii Peer-to-peer file sharing and secondary liability in copyright law

Vermaat v Boncrest (No 2) [2002]FSR 21 223

Viacom International Inc. v YouTubeInc., Civ. Action No. 07 CV 2103(S.D.N.Y. filed 13 Mar. 2007)16, 240

Voda v Cordis Corporation, 476 F.3d887 (Fed. Cir. 2007) 137–8

WEA International Inc v HanimexCorporation Ltd., (1987) 10 IPR349, 17 FCR 274 122, 204

Wells Fargo v Wells Fargo ExpressCo, 556 F 2d 406 (9th Cir, 1977)139

Woolworths Ltd v Olson (2004) 63IPR 258 (New South Wales)203

Zeran v America Online, 129 F.3d327 (4th Cir. 1997) 236

Introduction: peer-to-peer file sharing andsecondary liability in copyright law

Alain Strowel1

Every book has a history. This book originates in a 2005 Brussels conferencediscussing the impact of peer-to-peer technology on the future of copyrightlaw.2 Peer-to-peer technology, as further explained below, allows people toexchange information over the Internet via many equal or ‘peer’ machineslinked across a network, rather than on a central server. From a copyright pointof view, the main controversy surrounding peer-to-peer networks is whetherproviders of peer-to-peer technology and services can be liable when usersinfringe copyright through their networks. This issue has been hotly debatedin legal circles and in the press, especially in 2005, when the US SupremeCourt issued its highly anticipated decision in the controversial case MGMStudios, Inc. v Grokster Ltd.3 In this decision, the Supreme Court held that thetwo popular file-sharing networks, Grokster and Streamcast (dba Morpheus),were indeed liable for ‘actively inducing’ the end-users’ acts of infringement.As will be explained, the liability for inducement is one form of secondaryliability for copyright infringement.

Peer-to-peer (or P2P) file sharing and secondary liability are the centralthemes in this collection of essays on copyright. Both topics are closely linked.‘Secondary’ (or derived) liability presupposes a primary infringer. In peer-to-peer networks, the primary infringers, those who upload copyrighted fileswithout authorization, are numerous and difficult to reach, and going afterthem poses many legal and practical issues. Copyright owners thus prefer todirect their legal actions against those who allow or promote direct infringe-ments, for instance, those who operate the peer-to-peer networks or develop

1

1 The author would like to thank Marisa Kakoulas, Esq. who was tremendouslyhelpful in the preparation and editing of this collection of essays.

2 During this conference organised by the Centre for Intellectual Property andInnovation of the Facultés Universitaires Saint-Louis, Professors Terry Fisher (HarvardLaw School), Jane Ginsburg (Columbia Law School) and Bernt Hugenholtz(University of Amsterdam) discussed the influence of peer-to-peer technology with apanel of stakeholders.

3 125 S. Ct. 2764 (2005).

the technical means (in particular the software) to make primary infringementsonline possible. The development of peer-to-peer networks over the Internethas, therefore, brought the issue of secondary liability to the forefront.

FROM PEER-TO-PEER TECHNOLOGY…

Peer-to-peer technology is quite well known in copyright circles, but at thesame time, the variety of applications covered by this broad term is largelyignored. Napster was one of the first P2P networks to become widely knownat the end of the 1990s; however, it works quite differently than Grokster orKazaa, which had their moments of fame in the early 2000s. In general terms,peer-to-peer technology is a decentralized system of computers that are able tointeract with each other without the intervention of servers. The computers arelinked across a network and act as equal peer nodes, allowing them to shareinformation with each other directly; thus, the computers in the network canact as both server and client. There lies the main difference between Napster-like systems and those like Grokster or Kazaa. While Napster, for example,based its file-sharing services on a centralized indexing system (using aproprietary network protocol), P2P networks like Grokster or Kazaa use adecentralized process called the ‘FastTrack’, which assigns indexing functionsto computers connected in the network, called ‘supernodes’, when needed.Virtually any computer in the network can be a supernode.

Alexander Peukert best describes the hopes and fears of these P2P networksin his original essay A Bipolar Copyright System for the Digital NetworkEnvironment (an abbreviated version of this text can be found later in thiscollection):

Peer-to-peer networks provide architecture for stable, cheap and global sharing ofany digitized information, be it music, movies, software, writings or other data. Theend-to-end or peer-to-peer architecture makes it possible for thousands of terabytesto rush through P2P networks every month without anybody having to invest in andprovide for a centralized server.4 The technology features characteristics thatprompt great hopes for the advent of the global knowledge community. However, italso terrifies copyright owners to definitely lose control over their works, which forthe user of these networks actually seem to be ‘free as the air to common use’.

In more current developments in P2P technologies, however, these fears arelargely being addressed by working with rights holders and government agen-

2 Peer-to-peer file sharing and secondary liability in copyright law

4 See MGM Studios, Inc. v Grokster Ltd., 125 S. Ct. 2764, 2770 (2005). See‘Streaming Media’, Wired, June 2004, 148–149 for a discussion on the growth of P2Ptraffic over the last few years and the content shared.

cies. For example, BitTorrent, a P2P communication protocol that uses track-ers and metafiles to coordinate file distribution, has had its share of legalcontroversy (although no significant case law yet), but in recent years hasworked with media companies and organizations to reduce illegal use of itsprotocol. In 2005, BitTorrent Inc. signed an agreement with the Motion PictureAssociation of America (MPAA) to collaborate on stopping Internet piracy;specifically, BitTorrent agreed to remove all links to unlicensed copies ofmovies owned by the seven MPAA studio members. Other ways to reconcilethe use of this promising technology with the possibility to protect and remu-nerate copyright holders are explored.

Despite such progress, copyright infringement online remains ubiquitous,triggering particularly important and fascinating legal discourse extendingbeyond that of direct infringement to the liability of third parties.

. . . TO SECONDARY LIABILITY IN COPYRIGHT LAW

Although this book is focused on peer-to-peer file sharing, it also addressesother situations and technologies likely to trigger secondary copyright liabil-ity, in particular, the situation of Internet intermediaries, such as hosting oraccess providers, and technologies, such as (dedicated) search engines orhyperlinking. Secondary liability rules are flexible and include doctrinesapplying to many different circumstances. For instance, in January 2008, thepress announced that the Warner Music Group was suing the companySeeqpod, which offers both a search engine and an online music player, for‘direct, contributory and vicarious infringement’ of the record label’s music.5

Seeqpod users can search through a virtual ‘library’ of more than eight millionsongs hosted in different locations, and then stream those they like (no down-loading is involved). Such streaming, Seeqpod claims, is protected ‘fair use’under US copyright law.

Contributory and vicarious infringements, discussed by various contribu-tors in this book, are just two forms of secondary liability that US copyrightlaw distinguishes. However, other doctrines and approaches to secondaryliability exist, and a number of these contributors offer compelling insight intothe way alternative doctrines of secondary liability apply in other countries,for instance, in Europe and Asia.

Introduction 3

5 See Antony Bruno, ‘WMG Sues Music Search Site Seeqpod’, Billboard.biz,23 Jan. 2008.

AN OVERVIEW OF LEGAL DOCTRINES AND CASE LAWON SECONDARY LIABILITY

In a contribution entitled ‘Liability of Users and Third Parties for CopyrightInfringement on the Internet’, Allen N. Dixon, an intellectual property and tech-nology consultant with extensive experience in the software and music indus-try, offers a very comprehensive overview of the international developments onthe different rules that extend copyright liability to those who encourage, assistor benefit from the infringements committed by the primary infringers.Secondary liability applies to the ‘brick-and-mortar’ jukebox and music halloperators, copy shops and other purchasing agents on the market. On theInternet, intermediaries also exist, contrary to what is sometimes believed:hosting and access providers, search engines and other providers of informationlocation tools, such as links, are only some among the many intermediaries thathelp the information sought to be identified by and conveyed to the users. AllenDixon’s paper really sets the scene for any discussion on secondary copyrightliability by thoroughly defining the various actors in the Internet chain and bycarefully distinguishing the various sources and theories that have been used indifferent countries to address this liability. While US law uses the rubrics‘contributory liability’ and ‘vicarious liability’, along with the more recentlydeveloped principle of ‘inducement liability’, other common law countries (inparticular, the UK and Australia) rely on the notion of ‘authorisation’ enshrinedin statutes deriving from the UK Copyright Acts. For civil law countries, AllenDixon rightly stresses the role played by the general tort rule (responsabilitécivile in France and Belgium) from which a duty of care (zorvuldigheidsnormin the Netherlands) can be derived, or the liability that allows some injunctiverelief, but no damages (such as the German doctrine of Störerhaftung).

Similarly, Michael Schlesinger, Of Counsel to the law firm of GreenbergTraurig LLP in Washington, DC, provides an overview of the most recent caselaw on peer-to-peer, with a special focus on Asia. Michael Schlesinger’s paperis more focused on primary liability; it starts with an analysis of the ‘umbrellasolution’ enshrined in the WIPO Treaties, that is, the ‘making available right’.A crucial part of a P2P transaction involves the acts of the uploader who makesavailable a copyrighted file on the P2P network, but P2P file sharing alsoinvolves the acts committed on the receiving end by the downloader (in partic-ular, the reproduction of the file on his or her system). The 1996 WIPOTreaties created a new right covering interactive transmissions: the makingavailable right of Art. 8 of the World Copyright Treaty. This right is supposedto cover the acts of the uploader who makes the file available online. Whentransposing this right in their national system, member states retain some roomto manoeuvre: the US relied upon the distribution right to cover the deliveryof protected files through online transmissions; in Europe, distribution is


limited to tangible copies and cannot apply to online acts of dissemination.Regarding online transmissions, the 2001 EC Directive on Copyright in theInformation Society has thus opted for an autonomous ‘communication to thepublic right’, which includes the ‘making available right’.

A string of recent US cases discussing whether the making available rightis included in the distribution right provided by the US Copyright Act is laterdiscussed by Michael Schlesinger. His contribution ends with an extensivereview of the case law from Asia, including Hong Kong, China, Taiwan andJapan; the summaries and comments on those Asian decisions is particularlyuseful for those of us who do not have easy access to this case law.

SECONDARY COPYRIGHT LIABILITY ANDHYPERLINKING

Further analysing the seminal case decisions cited by Allen Dixon, othercontributors raise additional situations triggering secondary liability. For one,the case law on the liability for linking is analyzed by Vicky Hanley, an asso-ciate with Covington & Burling LLP, and the editor of this collection, AlainStrowel, who is a professor at the Facultés Universitaires Saint-Louis, Brusselsand Of Counsel with Covington & Burling LLP. As hyperlinking is a widelyused tool, essential to the functioning of the web as well as multi-faceted (onecan distinguish standard links from deep links, frames and embedded links),many cases have made their way before courts internationally, and the variouslegal solutions addressing secondary liability have been applied. Hyperlinkingclearly engages the responsibility of the link provider in some instances (suchas when the provider knowingly endorses the illicit materials to which s/helinks), but other intermediaries have also been targeted in actions based onliability for hyperlinking, in cases where responsibility is not so clear. Forinstance, some hosting providers were specifically directed to take down linksposted by their clients on pages hosted on their servers. More importantly, theissue of liability for dedicated search engines, which retrieve lists of links, orfor content aggregators relying on the collection of links, have been involvedin cases that have helped draw the line between ‘dangerous (online) liaisons’and the ‘good relationship’ that Internet sites and intermediaries should have.

THE LEADING P2P CASES AND THEIR LEGALCONSEQUENCES

Various contributions explore in detail how the rules of secondary liabilityhave been applied to P2P in some national laws.

Introduction 5

In a contribution called ‘Copyright Control v Compensation: The Prospectsfor Exclusive Rights after Grokster and Kazaa’, Jane Ginsburg, the Morton L.Janklow Professor of Literary and Artistic Property at the ColumbiaUniversity School of Law, offers a thorough analysis of the criteria applied byUS and Australian courts in delineating secondary liability for copyrightinfringement. Her review of the key US decisions, including Sony,6 Napster,7

and Grokster,8 elucidates the reasoning of US judges in dealing with third-party infringements and in distinguishing between contributory liability, vicar-ious liability and inducement liability. Also, Jane Ginsburg’s presentation ofAustralian case law shows that similar outcomes can be reached throughdifferent means: the decision in the leading Australian case, Kazaa,9 offersstriking resemblance to the Grokster’s analysis. However, while the USapproach is grounded in the common law, the Australian view relies on aprovision of the Australian Copyright Act that renders the ‘authorisation’ ofinfringement a direct violation of the statute. After Kazaa, a P2P business thatdeliberately foregoes control that it could have exercised had it designed itsservice differently may be found to have ‘authorized’ the ensuing infringe-ments, and therefore, may be held liable.

Professor Graeme Austin, the J. Byron McCormick Professor of Law at theUniversity of Arizona, further explores the international character of theemerging law on P2P networks in the same common law jurisdictions,Australia and the United States. Graeme Austin’s starting point is that whilethe law applicable to P2P networks may still be tethered within domesticborders, its application to P2P results in a ‘de facto’ export of the national ruleson secondary copyright liability.

Indeed, the rulings on P2P tend not to distinguish infringements (or ‘acts ofauthorization’ in the case of Australian law) that occur in or outside the coun-try where the copyright infringement case is brought. The remedies sometimesimposed (for example, a filter in the Australian Kazaa case) also potentiallyaffect all users of the P2P system, including those located abroad. Theextraterritorial reach of the leading P2P decisions, such as Kazaa, means thata ‘de facto’ export of liability theories is occurring although most intellectualproperty laws, and particularly the US case law (for example, the 2007Microsoft v AT&T decision of the US Supreme Court) analysed by GraemeAustin later on, are based on a territoriality principle that prohibits the exten-sion of domestic law to conduct in foreign territories. Graeme Austin believes


6 Sony Corp. of American v Universal City Studios, 464 U.S. 417 (1984).7 A&M Records, Inc. v Napster, Inc., 239 F.3d 1004 (9th Cir. 2001).8 MGM Studios, Inc. v Grokster Ltd., 125 S. Ct. 2764 (2005).9 Universal Music Australia Pty Ltd. v Sharman License Holdings Ltd., (2005)

FCA 1242.

that a strict view on territoriality – which would require domestic courts wherethe primary acts of infringements occur to take responsibility – could make thelegal analysis largely unmanageable. In addition, Graeme Austin considers theimpact of public international law norms (the Berne Convention) on privateinternational law and on the conflict of law issue; if those international normsare taken seriously, Graeme Austin argues, courts imposing liability for indi-rect infringement should not be impeded by the fact that their decisions mighthave extraterritorial effects.

COPYRIGHT IN THE AGE OF P2P: TOWARDS A‘COMPENSATION WITHOUT CONTROL’ MODEL?

Peer-to-peer software and other information location tools enabled by the digi-tal revolution have made copyright appear somewhat out-dated to someobservers. A few contributions of this book explore, beyond peer-to-peer tech-nology, the ways copyright could eventually be reshaped to respond to thisnew environment.

Proposing a forward-looking analysis of the P2P phenomenon and itsimpact on copyright is Alexander Peukert, an Asssociate Professor of CivilLaw, Commercial Law and Intellectual Property Law at the Johann-Wolfgang Goethe University Frankfurt/Main. In his paper ‘A BipolarCopyright System for the Digital Network Environment’, he reviewsproposals made by various commentators10 that non-commercial file sharingshould be considered lawful, while copyright owners would be compensatedindirectly through a voluntary collective licensing scheme, a levy (or non-voluntary licence) or a tax system. Those alternative proposals rely on thepremise that efficient control of the use of P2P networks is not possible with-out banning the technology altogether or, at least, without severe encroach-ments on privacy and other drawbacks associated with systematicmonitoring of the Internet. Alexander Peukert’s paper first analyses thecompatibility of those alternatives with the international obligations deriv-ing from the Berne Convention, the TRIPS Agreement and the WIPOCopyright Treaty, in particular with the three-step-test establishing thedistinction between exclusivity and non-voluntary licences.

Introduction 7

10 Most advocates of those alternative solutions, for example, Terry Fisher, NeilNetanel, Aric Jacover, Jessica Litman, Mark Lemley and Anthony Reese, are US-basedacademics. It is in France, however, that the solution of a non-voluntary licence (‘thelicence globale’) was at some point seriously considered by the legislature during theParliamentary discussions leading to the adoption of the 2006 French Copyright Act.

Beyond reviewing the shortcomings of those alternative proposals,Peukert’s contribution advocates the adoption of a new copyright model forthe digital online environment, which he calls the ‘bipolar copyright system’.The bipolar copyright system allows the right holder to choose freely betweenexclusive exploitation (possibly with the aid of DRMs) and participation in thelevy/tax system as regards non-commercial file sharing. In Peukert’s complexmodel, the choice between an individual licence or a levy/remuneration can bemade at the time of the works’ first publication, but to switch-over from onesystem to the other one is still possible later.11

Peukert’s view that copyright exclusivity should not rule cyberspace is notshared by all commentators. On the contrary, the case law on P2P has, in thewords of Professor Jane Ginsburg, ‘taken some of the wind out of the sails ofproposals to substitute a P2P levy scheme for authors’ exclusive rights’.Compensation through levies (or compensation without control) is not an easysubstitute for the control offered by the authors’ exclusive rights: copyrightpractitioners and collecting societies in continental Europe who have experi-enced the wealth of issues raised by levies, such as the difficulty of collection,are ready to accept this evidence, while US academics are more easily temptedby a system that looks attractive from a distance, but whose implementation isprone to generating difficulties and litigation.

ONLINE COPYRIGHT AND THE EVOLVING LIABILITYOF INTERMEDIARIES

Other contributors do not challenge the exclusive right model, but rather itsuse by rights owners against primary infringers. Robert Clark, professor at theUniversity College, Dublin, is sceptical about the increased use of criminallaw by the music industry in fighting uploaders. In his chapter ‘Sharing OutOnline Liability: Sharing Files, Sharing Risks and Targeting ISPs’, he consid-ers that such a development is not a proportionate response to the massinfringements on P2P networks, especially when civil law remedies are avail-able. However, the use of civil remedies is sometimes directly impeded bydata protection rules – as shown by his review of decisions on discovery ofsubscribers’ data held in various jurisdictions (Ireland, Netherlands, Spain,UK, etc.). According to Robert Clark, liability decisions in Canada, Irelandand the UK – which are helpfully compared with the US and Autralian deci-


11 Although Peukert’s paper emphasises some issues linked with a levy system,a thorough discussion about the merits and drawbacks of levies is well beyond thescope of the present volume.

sions discussed elsewhere in the book – show a trend towards a system of‘sharing risks’ for ‘sharing files’: most decisions explore the possibility ofallocating both the risk and liability in a much more horizontal way than theearly stages of the debate on file sharing could have possibly anticipated.Robert Clark’s chapter, in essence, focuses on the online liability of InternetService Providers and on the interpretation of the ‘safe harbour’ provisions ofthe 2000 EC Electronic Commerce Directive. His review of recent case law,including the Belgian Scarlet case on access provider liability for P2P filesharing, points towards a possible weakening of ISP immunity in Europe. Atthe very least, the case law partly supports the legislative attempts to have ISPsmore directly involved through the use of filtering systems at different levels.Technological tools, and their imposition by law, now move towards the centreof the debate on secondary liability and P2P.

The issue of technological measures of protection and the link with ISPliability is also central in the comprehensive and forward-looking contributionjointly prepared by Jerome H. Reichman, the Bunyan S. Womble Professor ofLaw at Duke Law School; Graeme B. Dinwoodie, Professor of Law atChicago-Kent College of Law; and Pamela Samuelson, the Richard M.Sherman Distinguished Professor of Law at Boalt Hall School of Law. In ‘AReverse Notice and Takedown Regime To Enable Public Interest Uses ofTechnically Protected Copyrighted Works’, those authors plead in favour of amore balanced system for protecting copy or access control technologies,usually embedded in, or complemented by, digital rights management systems(DRMs). Technological measures and DRMs are, in theory, a possible solutionto limit mass infringement online – but their effective implementation by rightsowners and their acceptance by the public, at least in the field of music, seemsquite remote and improbable. That said, the three authors of this chapter areprimarily concerned with the law on technological measures as it should bedesigned. Interestingly, their proposal to adjust the anti-circumvention rulesrelies on the checks and balances embedded in the ISP safe harbour rules. Theyargue that the notice and takedown procedure first developed through commonlaw adjudication about ISP liability for wrongful acts of users, then incorpo-rated in the US Digital Millenium Copyright Act, offers a good balance that isstill missing in the anti-circumvention rules adopted in the US and in the EU.They advocate, therefore, what they call a ‘reverse notice and takedown’process, that is, a process where users give notice of their desire to make publicinterest uses of technically protected copyrighted works, and content ownerswould have the responsibility of taking down the works or enabling their lawfuluse. In Europe, this ‘reverse notice and takedown’ process would possiblyeffectuate the obligation that EU Member States have to ensure that users areable to enjoy some copyright exceptions (Art. 6(4) of the 2001 EC Directive onCopyright in the Information Society).

Introduction 9

THE RECENT LEGISLATIVE DEVELOPMENTSAFFECTING ONLINE INTERMEDIARIES: THEOLIVENNES AGREEMENT IN FRANCE AND BEYOND

P2P file sharing and other online technologies such as hyperlinks and searchengines remain a core concern for copyright owners, especially for the musicand film industries. Developments since 2007 have shown increased attentionto the role of online intermediaries, particularly access providers, in fightingonline piracy.

For instance, in France, an agreement between various stakeholders (themusic and film companies on one side, the ISPs on the other side) wasconcluded on 23 November 2007, following a study conducted by Mr DenisOlivennes. The so-called ‘Olivennes Agreement’ is part of a new ‘govern-ment-led crackdown on copyright violation by users of P2P file sharingservices’.12 Under this new initiative, ISPs should cooperate more effectivelywith copyright holders to deter high-volume users of P2P sites. The draft lawadopted by the French Council of Ministers on 18 June 2008 seeks to codifythe Olivennes Agreement. It will be submitted to Parliament for adoption inthe Spring of 2009. One of the main contributions of this legislative develop-ment is the creation of a new independent copyright enforcement authority(the High Authority). It appears that fighting mass copyright infringementthrough the standard court system is not fully adequate: the judicial procedureis generally slow and costly; the remedies are relatively inadequate; and theprocessing and disclosure of personal data is not usually allowed in relation tocivil proceedings, making it difficult to establish such infringements in thefirst instance. These are just some of the reasons justifying the development ofan alternative solution to the standard court system. The magnitude of copy-right infringement through P2P and new online platforms (such as user-gener-ated sites or online auction sites) probably requires new authorities and newremedies, at least if one intends to tackle direct infringements by Internetusers. This does not necessarily mean that stronger remedies are needed, atleast initially; in a sense, the new draft law in France proposes a quite moder-ate approach in the so-called ‘graduated response’, which prescribes asequence of measures to be applied to repeat infringers.13 To circumvent the


12 Lawrence J. Speer, ‘France Launches Innovative Crackdown on P2PDownloads, ISPs Will Participate’, Online News of the Bureau of National Affairs, 26November 2007.

13 The High Authority will first issue warnings to end-users. In case of repeatedinfringement, the High Authority can propose a one to three months Internet accesssuspension to the subscriber as a settlement measure. In case the subscriber refuses thisproposed settlement and new infringements are committed within one year of the warn-

issue of data protection, special rules are also defined in the draft, that allowcertain designated private parties to collect personal data and transmit it to theHigh Authority for processing.

Other developments at the EU level (such as the European Commission’sconsultation and the January 2008 Communication on ‘Creative ContentOnline in the Single Market’) and at the national level (such as the February2008 UK Green Paper entitled ‘Creative Britain: New Talents for the NewEconomy’) all point towards the creation of a new framework for addressingmass copyright infringement on the Internet and the increasing role to beplayed by intermediaries.

We will see whether the new French approach to tackling online copyrightinfringements, should it be incorporated into law, will succeed. The comingmonths will be decisive in that regard. Even if such a system is integrated intothe French legal arsenal, it is doubtful that many other (European) countrieswill follow this example in the mid-term. However, it is clear that the role ofISPs in fighting online infringements will continue to be hotly debated.

Although legislative changes could potentially redefine the way onlineinfringement is addressed, the standard rules on secondary liability as appliedby the courts in civil proceedings for copyright infringement will remain thepreferred way to combat P2P and other mass copyright infringement. Thus, anoverview of the main doctrines and issues of secondary copyright liabilityremains a valuable tool.

Introduction 11

ing letter, the High Authority may order the suspension of access for a period of threemonths to one year.

1. Liability of users and third parties forcopyright infringements on theInternet: overview of internationaldevelopments

Allen N. Dixon*

OVERVIEW

Civil and criminal law have never limited liability only to the person whopersonally commits a tort or criminal offence. In every country, a range ofdifferent rules extend such liability in some cases to others who encourage,assist or benefit from another person’s tort or crime.

Copyright is no different. From music hall and boot sale operators, to copyshops, to various service and product providers on the Internet, those who arelinked to the direct copyright infringements of others may find themselvessubject to liability for those infringements in some circumstances.

This chapter reviews recent international developments in the area of userand third-party liability, particularly regarding the Internet and so-called filesharing. It tries to make sense of the labels variously applied to these activitiesand examines the holdings of various cases. Finally, it summarises the generalprinciples that courts and legislators are using to evaluate different types ofthird-party activity in determining copyright liability.

A NOT-SO-FARFETCHED SCENARIO

A new taxi service GetawayQuick drives members of the public to the desti-nations they choose. Unlike most car services, however, the business model ofthis one is to become the car service of choice among bank robbers. Becauseof its inside knowledge, and the speed and nondescript nature of its cars, this

12

* The author acknowledges the kind research assistance of St. John’s Universitylaw sudents Nicholas Madonia and Edward McNamara.

service is particularly good at getting bank robbers to the banks and doing aquick getaway.

Ninety percent or more of its work is bank jobs. In theory, the service coulddrive customers to estate-agent offices, blind dates, or free-speech ralliesamong Chinese dissidents, but no one has actually proved that any jobs of thatsort have ever happened. The drivers take the robbers to the bank, wait outsideduring the stick-up, carry the robbers with the loot away – to other jobs if theylike – and make money in the process. The service is so efficient that hugenumbers of people have decided to get into the bank robbing game, and thecab service’s business is booming. Advertisers are queuing up to sell things totheir customers.

When arrested for aiding and abetting multiple bank robberies, the taxicompany is shocked. ‘Our drivers never pulled a gun on anyone, or touchedthe money,’ they say. ‘We had no idea what was going on in all those banks –these people may have been visiting friends or engaging in perfectly legitimatebank transactions. If they happen to come out with money, they’re not steal-ing it, they’re just sharing it. As a matter of fact, banks are greedy institutionsthat deserve what they get. They charge way too much in fees and interest, andhave been entirely too slow in adopting Internet banking, which would havebeen a lot more secure. This arrest is just a continuation of outdated policepractices, which violate our right to drive, and chill the development of newand exciting taxi service models.’

Meanwhile, the national taxi association and the major automobile manu-facturers – while not threatened with such prosecutions themselves – havegone to the legislature en masse to be sure they are not prosecuted for bankrobberies. Friends of these industries in the legislature are regaled with night-mare scenarios about the dangers to them of prosecuting GetawayQuick.GetawayQuick itself organises its nouveau riche customers to stage sit-ins andwrite to their representatives. The legislature ‘clarifies’ the common law ofaiding and abetting to deal with a few specific cab services and manufacturingactivities. GetawayQuick changes its business slightly to make sure it is notcaught by the new legislation.1

DEFINITIONS

Given that this area is replete with catchwords that different people use differ-ently, it may be useful to define a few terms before examining what the courtsand legislators have been doing in this area.

Liability of users and third parties for copyright infringements 13

1 This scenario is entirely fictional and satirical. Any resemblance to realpersons or events is entirely coincidental.

‘User’. This term is used here to mean the person who engages in an act ofinfringement – the person who makes a reproduction, adaptation, performance,communication or distribution in violation of the copyright or related-rightsowner’s rights.

‘Third party’. This term means the person who has not engaged in an actof infringement, but who is somehow connected with it. There are a range ofactivity-related words (for example, ‘intermediary’, ‘service provider’) andqualitative terms (for example, ‘accomplice’, ‘contributor’, ‘inciter’) regularlyused for such third parties and their activities.

‘Intermediary’. An ‘intermediary’ is one type of third party. The term iscommonly applied to telecommunications companies that provide, at a mini-mum, Internet access and connectivity between two or more individuals.

‘Service provider’. In common parlance, this can mean anyone providingany kind of service, whether Internet-based or otherwise – any of whom mightbecome involved as third parties in infringement. The US Digital MillenniumCopyright Act applies this term for some purposes to Internet access providers,and for other purposes to all types of providers of services on-line.2 The EUE-Commerce Directive opted for a broader definition, covering all providersof ‘information society services’.3 These and other similar laws grant liabilityexemptions to a defined set of ‘service providers’, not typically on the basis oftheir status but with respect to specifically defined activities that meet specificconditions.

‘Internet’. This is the publicly accessible telecommunications network ofinterconnected computers and networks that operate on the basis of ‘packetswitching’ technology and standard protocols such as IP (Internet protocol),HTTP (hypertext transfer protocol) and the like. Approximately 1.5 billionpeople world-wide use the Internet.4

‘File sharing’. File sharing is the making available of files from a user’sown computer for copying and transmission to other users over the Internet,


2 17 U.S.C. § 512(k): ‘(A) As used in subsection (a), the term “serviceprovider” means an entity offering the transmission, routing, or providing of connec-tions for digital online communications, between or among points specified by a user,of material of the user’s choosing, without modification to the content of the materialas sent or received. (B) As used in this section, other than subsection (a), the term“service provider” means a provider of online services or network access, or the oper-ator of facilities therefor, and includes an entity described in subparagraph (A).’http://www.copyright.gov/title17/92chap5.html.

3 Arts. 2(a)–(b), Directive 2000/31/EC of the European Parliament and of theCouncil of 8 June 2000 on certain legal aspects of information society services, inparticular electronic commerce, in the Internal Market (‘E-commerce Directive’), O.J.L 178 (17 July 2000), at 1–16, http://europa.eu.int/eur-lex/lex/LexUriServ/LexUriServdo?uri=CELEX:32000L0031:EN:HTML.

4 http://www.Internetworldstats.com/stats.htm.

and the receipt of files made available this way. File sharing thus involvesuploading as well as downloading. File sharing takes place in networks ofusers. Third parties have developed the file-sharing services and technologiesrequired to connect users and enable them to carry out such transmission andcopying activities in the third party’s particular ‘peer-to-peer’ (P2P) network.5

COMMON LAW AND CIVIL LAW RULES

The law in the area of third-party liability derives from a number of sources –statutory rules specific to the copyright area, case law developments in copy-right, and more general common law or civil law legal rules.

US: Common Law Copyright and Tort Principles

The US law on third-party liability for copyright infringement traditionallyuses the rubrics contributory liability and vicarious liability as applied in along line of case law in the copyright area, and more recently the principle ofinducement liability.

• Contributory liability arises where a third party with knowledge of theinfringing activity, induces, causes or materially contributes to theinfringing conduct of another.6 The Sony Betamax case7 of 1984 foundthat intent to cause infringement could not be presumed or imputedsolely from the design or distribution of a product capable of substantiallawful use, which the third party knows is in fact used for infringement.8

• Vicarious liability is imposed where a third party controls theinfringer’s actions and receives a financial benefit from the infringe-ment.9

• Inducement liability has been recently reinvigorated by the USSupreme Court in the Grokster10 case, which found that a third party


5 To speed up searches, these services and technologies typically create indexesof users on-line and files on offer. Such indexes can be maintained by the service ortechnology provider (‘centralised indexing’), but sometimes are pushed down to theusers’ own computers (‘decentralised indexing’).

6 Gershwin Publishing Corp. v Columbia Artists Management, Inc., 443 F.2d1159, 1162 (2d Cir. 1971).

7 Sony Corp. of America v Universal City Studios, Inc., 464 U. S. 417 (1984).8 This summary of the Sony holding was set forth in the Supreme Court’s deci-

sion in Grokster, infra n. 10, at 16, 17.9 Shapiro, Bernstein & Co. v H.L. Green Co., 316 F.2d 304, 306 (2d Cir. 1963).

10 Metro-Goldwyn-Mayer Studios Inc., v Grokster, Ltd., No. 04-480, at 1 (S. Ct.

who distributes a device with the object of promoting its use to infringecopyright, as shown by clear expression or other affirmative steps tofoster infringement, is liable for the users’ resulting acts of infringement.11

Commonwealth Countries: Statutory and Common Law ‘Authorisation’,‘Vicarious Liability’, ‘Joint Tortfeasor’ and Incitement Rules

In Commonwealth countries, third-party copyright liability has sprung fromthe notion of ‘authorisation’ – now enshrined in statutory law and interpretedmore broadly than its strict meaning – as well as from other common law tortand criminal law principles.


27 Jun. 2005), http://www.supremecourtus.gov/opinions/04pdf/04-480.pdf. The Kazaaand Grokster defendants settled this litigation following the Supreme Court decision.RIAA, Press Release: Music Industry Announces Grokster Settlement (7 Nov 2005),http://www.riaa.com/newsitem.php?news_year_filter=&resultpage=16&id=81648953-2457-2877-94B4-D28C93625445; RIAA, Press Release: Kazaa Settles with RecordIndustry and Goes Legitimate (27 Jul. 2006), http://www.riaa.com/newsitem.php?id=46A7DBAB-CEFA-B6D5-F81A-BBB34C2A2581. Streamcast continued tochallenge the plaintiffs’ case, including the need and scope of any potential filteringremedies. See Plaintiff’s Opposition to Defendant Streamcast Networks Inc.’s Requestfor Additional Discovery, MGM Studios Inc. v Grokster Ltd., No. CV 01-08541 (C.D.Cal. Filed 16 Apr. 2007).

11 The US courts are continuing to explore the limits and the interplay of the vari-ous bases for third party copyright liability in the wake of the Grokster decision. SeePerfect 10, Inc. v CCBill LLC, No. 04-57143 (9th Cir. 31 May 2007) (amended opinion)(reviewing ISP liability limitations); Perfect 10, Inc. v Visa International Service Ass’n,No. 05-15170 (9th Cir., 3 Jul. 2007) (payment processing providers made no ‘materialcontribution’ to infringement and were not vicariously or contributorily liable); Perfect10, Inc. v Amazom.com, Inc., No. 06-55405 (9th Cir., 16 May 2007) (search engine link-ing to full-sized infringing photographs on other sites not vicariously liable but could becontributorily liable ‘if it “has actual knowledge that specific infringing material is avail-able using its system,” Napster, 239 F.3d at 1022, and can “take simple measures toprevent further damage” to copyrighted works, Netcom, 907 F. Supp. At 1375, yet contin-ues to provide access to infringing works’); Viacom International Inc. v YouTube Inc., CivAction No. 07 CV 2103 (S.D.N.Y. filed 13 Mar. 2007) (lawsuit against operator of user-uploaded content site for alleged direct, inducement, contributory and vicarious liability),http://news.justia.com/cases/viacom-youtube/337988/1/0.pdf.

Various rights owners brought lawsuits against Bertelsmann in its role as investor inthe original Napster service. Without admitting any liability, Bertelsmann has paidmore than $200M to settle the suits against Bertelsmann – $110M to Warner Music,$60M to Universal Music, and a reported $44.5M to EMI. Warner Music Corp., SECForm 10-Q, para. 16 (8 May 2007), http://www.sec.gov/Archives/edgar/data/1319161/000119312507105272/d10q.htm; EMI, Bertelsmann settle Napster suit,Financial Times (26 March 2007); Bertelsmann, Press Release: Bertelsmann remainson track in first quarter (15 May 2007), http://www.bertelsmann.com/bertelsmann_corp/wms41//customers/bmir/pdf/Q1_2007_e.pdf.

• ‘Authorisation’ theory. Under both statutory12 and common law13

principles in the UK and other Commonwealth countries, it has longbeen unlawful to ‘authorise’ another person to infringe copyright.‘Authorisation’ has not just been interpreted literally, that is, purportingto grant a licence to use copyrighted material. It has been used to covera broader range of activities that the third party may ‘sanction, approveor countenance’,14 ‘permit’ or even treat with ‘inactivity’ or ‘indiffer-ence’.15 For example, juke box providers, bandstand owners, purchas-ing agents and similar third parties have been held liable for‘authorising’ the infringement of others.16 In CBS Records v Amstrad,17

by contrast, the House of Lords held that equipment manufacturers anddistributors that marketed and sold cassette duplication equipmentmerely ‘facilitated’ or gave users the ‘power’ to infringe – which did notrise to the level of ‘authorisation’, given that users determined whetherand what they were going to copy, the devices could be used for lawfulas well as unlawful purposes, the suppliers had given warning that somecopying required permission which they had no authority to give, andthe suppliers had no control over use of the equipment after the sale.

• Australian three-part test for authorisation. In the Copyright (DigitalAgenda) Act that Australia adopted in 2000, the offence of ‘authorisa-tion’ was spelled out more specifically to reflect Australian case law,including the Moorhouse case.18 In Moorhouse, a three-judge panel ofthe Federal Court found that a university library that offered coin-oper-ated photocopiers and implemented inadequate supervision and warn-ings against a user’s copyright infringement was liable for ‘authorising’


12 See for example, UK Copyright Act 1911, s. 1(2) (copyright includes the soleright ‘to authorise any such acts as aforesaid.’); UK Copyright Act 1956, s. 1(1) (copy-right means the exclusive right ‘to authorise other persons to do’ certain acts in relationto that work; UK Copyright Designs Patents Act 1988 ss. 16(2), 16(3)(b) (copyright isinfringed by a person who ‘authorised another to do’ any of the acts restricted by thecopyright, whether ‘directly or indirectly’)

13 Falcon v Famous Players Film Co. [1926] 2 KB 474.14 Id. at 491.15 Adelaide Corp. v Australasian Performing Right Ass’n Ltd., (1928) 40 CLR

481 (High Ct. Australia).16 See generally Copinger and Skone-James on Copyright, 15th ed., para. 7-133,

at 451–453 (2005). Laddie, Prescott & Vitoria (2000), The Modern Law of Copyrightsand Designs, 3rd ed., §§ 39.16, at 1773–5.

17 CBS Songs Ltd. v Amstrad Consumer Electronics Plc [1988] AC 1013, [1988]All E.R. 484.

18 University of New South Wales v Moorhouse, [1975] HCA 26; (1975) 133CLR 1 (High Ct. Australia, 1 Aug. 1975), http://www.austlii.edu.au/cgi-bin/disp.pl/au/cases/cth/HCA/1975/26.html.

that infringement.19 Section 36(1A) of the Australian Copyright Actnow sets forth three factors to be ‘taken into account’ in a determinationof authorisation: control, relationship, and due care.20

• Vicarious liability. Under general common law principles, an employercan be held vicariously liable for employees’ or agents’ infringementsdone under the employer’s authority.21

• Joint tortfeasor liability. Similar common law principles hold a thirdparty liable if he or she is engaged in a ‘common design’ with someonewho commits or authorises an infringement in pursuance of thatdesign.22

• Criminal law accomplice liability. Although rarely applied in practice,the common law rules on criminal accomplice liability can be applied toa third party who knowingly incites (‘solicits, encourages, pressurises,threatens or endeavours to persuade’), or aids, abets, counsels orprocures another to commit a criminal copyright offence.23

Civil Law Jurisdictions

• Knowing assistance. In civil law countries, third parties generally canbe held liable under either civil or criminal law where they knowinglyassist in the copyright infringements of another.24


19 Id.20 Sec. 36(1A), Australia Copyright Act 1968, as amended, provides as follows:

‘In determining, for the purposes of subsection (1), whether or not a person has autho-rised the doing in Australia of any act comprised in the copyright in a work, withoutthe licence of the owner of the copyright, the matters that must be taken into accountinclude the following:

(a) the extent (if any) of the person’s power to prevent the doing of the actconcerned;(b) the nature of any relationship existing between the person and the person whodid the act concerned;(c) whether the person took any reasonable steps to prevent or avoid the doing ofthe act, including whether the person complied with any relevant industry codes ofpractice.21 See for example, Performing Right Society Ltd. v Mitchell and Booker, Ltd

[1924] KB 762. 22 In The Koursk [1924] All ER Rep 168, at 175, cited with approval in Amstrad,

supra n. 17.23 See generally Garnett, Rayner James and Davies (1999), Copinger & Skone

James on Copyright, ss. 23–24, at 1099–1100 (14th ed.).24 See for example, TONO v Bruvik, Civil Case No. 2004/822 (S. Ct. Norway,

27 January 2005) (defendant found liable for users’ unlawful Internet communicationsof music files via hyperlinks on defendant’s site, where defendant ‘deliberatelyassisted’ such uploading, acted with intent, advertised ‘Download as much as you

• Duty of care to avoid damage. Civil law countries also tend to impose,under a general legal ‘duty of care’, an obligation to act reasonably toprevent harm to others. The duty required typically depends on the factsand circumstances. An illegal act by someone is necessary (the user’sinfringement itself is usually sufficient), and some level of knowledgeon the part of the third party is typically required for liability to attach.Courts often look at economic benefit to the third party and engage incost-benefit analysis (cost of harm, cost of avoidance, magnitude ofharm) in determining the duty of care, the existence of any violation ofthat duty, and any remedy therefor.25

• Injunctive relief against third parties. Civil law typically allowsprospective injunctions against persons involved in someone else’s tort,even if those third parties did not have prior knowledge of the wrong-doing. The German doctrine of Störerhaftung, for example, allowsinjunctions against third parties engaging in affirmative acts that causea ‘disturbance’, even though damages will not be imposed against suchparties without proof of knowledge.26 Along these lines, the EU’s 2001Copyright Directive requires that national law make injunctions avail-able to rights owners against intermediaries whose services are used toinfringe copyright, even if the intermediaries themselves are not liablefor the infringement.27

APPLICATION AND LIMITATIONS OF COPYRIGHTLIABILITY TO ON-LINE ACTIVITIES

User Liability

With the advent of Internet and other on-line services, the question arose asto how traditional copyright rules would apply to a range of on-line activi-ties. The initial question of the early- and mid-1990s was whether and how


wish’, and ‘was undoubtedly aware’ that users were uploading without consent. Seegenerally Sterling, World Copyright Law, ss. 13.08–13.09 (London: Sweet & Maxwell1998) (‘the general rule is that one is liable for consciously bringing about or assistingin the bringing about of infringements by other persons. Liability in this area isfrequently (but not exclusively) linked to questions of knowledge’ (emphasis added)).

25 See generally Koelman & Hugenholtz, Online Service Provider Liability forCopyright Infringement, WIPO Workshop on Service Provider Liability (9–10December 1999).

26 See Hartwig (November 2004), Online auctioneers must work harder inGermany, Managing Intellectual Property (describing doctrine of the Rolex/Ricardo.decase).

27 See infra n. 75 and accompanying text.

copyright applied to user activities in the first instance. Copies now are stored,transmitted and used electronically – sometimes even temporarily. Could thecopyright concepts of reproduction and distribution, traditionally applied toarticles in tangible form, be interpreted to cover computer and on-line storage,transmission or usage?

The international community in the WIPO Copyright Treaties28 of 1996answered this question with a resounding Yes. Copyright does cover storage indigital form.29 Copyright also covers not just Internet transmissions but thevery act of ‘making available’ copyrighted material for access on theInternet.30

Thus, with rare exceptions,31 courts far and wide have found users liablefor posting and transmitting copyright material on the Internet without autho-risation, including over file-sharing services.32 This result has been reached


28 WIPO Copyright Treaty (WCT) (Geneva, 20 December 1996); WIPOPerformances and Phonograms Treaty (WPPT) (Geneva, 20 December 1996).

29 ‘The reproduction right, as set out in Article 9 of the Berne Convention, andthe exceptions permitted thereunder, fully apply in the digital environment, in particu-lar to the use of works in digital form. It is understood that the storage of a protectedwork in digital form in an electronic medium constitutes a reproduction within themeaning of Article 9 of the Berne Convention.’ Agreed Statements Concerning Article1(4) of WCT; see also Agreed Statements Concerning Articles 7, 11 and 16 of theWPPT.

30 Art. 8, WCT; Arts. 10, 14, WPPT.31 Reasons for Order and Order, BMG Canada Inc. v Doe, 2004 FC 488 (Canada

Fed. Ct. 31 March 04) (uploading and downloading not a copyright offence), reversedand aff’d in part, 2000 FCA 193 (Canada Ct. App. 19 May 2005); SCPP v Anthony G.,No. 0504090091 (Tribunal de Grande Instance de Paris, 8 December 2005) (privatecopy exception excuses P2P reproduction and transmission), reversed, AnthonyG./SCPP (Cour d’appel de Paris, 27 April 2007) (user fined and ordered to paydamages and costs); www.legalis.net/jurisprudence-decision.php3?id_article =1954.

32 Courts have issued judgments against music ‘file-sharers’ in many countries,including Denmark, France, Finland, Germany, Italy, UK. Examples of judgmentsinclude Polydor Ltd v Brown, No. HC 05C02035, [2005] EWHC 3191 (Ch) (UK HighCt. Chancery Division, 18 November 2005) (‘Connecting a computer to the Internetwhich is running P2P software and in which music files . . . are placed in a shared direc-tory falls within this infringing act. This is a primary act of copyright infringement andit does not matter whether the person knows or has reason to believe that what they aredoing is an infringement.’). See also Order in Interlocutory Injunction Proceedings, No.308 O 58/06 (Civ Chamber 8, Hamburg Landgericht, 25 January 2006); Order inInterlocutory Injunction Proceedings, No. 28 O 634/05 (Köln Landgericht, 23November 2005); Judgement, No. 95 Ds 1653 Js 15556/04 (57/04) (Kottbus D. Ct., 24May 2004); Judgement, No. 461 Cs 509 Js 1607/02 (Fürth D. Ct., 29 March 2004)(offering of recordings for downloading violates reproduction and/or ‘making avail-able’ rights) Most of these cases have been settled following compensation paymentsaveraging several thousand US dollars. See IFPI, Breakdown of legal cases against

under copyright rules in place both before and after implementation of theWIPO Treaties, on the basis that the copyright or neighbouring rights owner’sreproduction right, communication right and/or ‘making available’ right hasbeen violated. As of November 2007, for example, the recording industry hadbrought over 80,000 cases against users in 20 countries for making recordedmusic available without authorisation on file-sharing services.33

Third-Party Liability

1. Statutory exemptions for Internet service providersQuestions of third-party liability for Internet activities have come up in bothlegislative and litigation contexts. Major telecommunications companies madean initial pre-emptive push for specific statutory exceptions to the generalthird-party liability rules for certain Internet-related telecommunications activ-ities. These ‘Internet service provider’ liability rules have been implementedwith a fair amount of consistency throughout the world:

• ‘mere provision of physical facilities’ as such does not make a telecom-munications provider liable for someone else’s communication of copy-righted material;34

• ‘mere conduit’ providers of Internet access, real-time routing betweenthird parties, caching and similar transient and intermediate storage enroute, are exempt from damages if their users infringe;35 and

• ‘hosting’ providers whose systems are used indefinitely by users tostore infringing material, are exempt from damages so long as theyremove or block infringements when they know or reasonably shouldhave been aware of them.36


illegal file-sharing (15 November 2005), http://www.ifpi.org/content/section_news/20051115h.html.

33 Source: IFPI. See IFPI Press Release, Polish music industry continues legalactions against illegal file-sharing (20 April 2007), http://www.ifpi.org/content/section_news/20070420.html.

34 Agreed Statements Concerning Article 8, WCT, supra n. 28 (‘It is understoodthat the mere provision of physical facilities for enabling or making a communicationdoes not in itself amount to communication within the meaning of this Treaty or theBerne Convention.’).

35 17 U.S.C., supra n. 2, § 512(a)–(b) (mere conduit, caching exemptions); E-Commerce Directive, supra n. 3, Arts. 12–13 (same); Arts. 20-21, Regulations on theProtection of the Right of Communication Through Information Networks, (China)State Council Order No. 468 (‘China Internet Regulations’) (16 May 2006) (same).

36 17 U.S.C., supra n. 2, § 512(c) (hosting exemption); E-Commerce Directive,supra n. 3, Art. 14 (same); China Internet Regulations, supra n. 35, Art. 22.

A range of due-care requirements (such as effective user policies, or prompttake-down upon notice), and other particular requirements or limitations, aresometimes included in these statutory exemptions. While other types of on-line services, particularly file-sharing services, have tried to take advantage ofsuch exemptions,37 and some service providers have attempted to stretch theordinary meaning of words like ‘temporary’ reproduction and ‘caching’ toinclude more permanent and less passive activities,38 courts have been fairlyconsistent in applying these exemptions to the ordinary telecommunicationsfunctions for which they were initially designed.39

2. Third-party liability for ‘links’ sitesThe first major area to be litigated in many countries involved dial-up bulletinboards or Internet-based databases or websites. These caused very little trou-ble for the courts in determining that such sites were either directly infringingor unlawfully assisting in users’ on-line infringements.

The area of liability for hyperlinks or ‘links’ to infringing files produced asurprising number of cases, however, as defendants who hosted or madeInternet hyperlinks available have tried to find distinctions between commu-nicating the infringing material and communicating a link to infringing mate-rial – that is, their main argument was that the linking itself was not illegal.Internet service providers in some countries also tried to avoid taking downlinks to infringing material on the same basis.

Courts have tended to treat hyperlinks to infringing copyright materialunder a theory of assisting an infringement,40 or even as a matter of direct


37 See e.g., A&M Records, Inc. v Napster, Inc., 114 F. Supp. 2d 896, at 919 n.24(denying summary judgment to Napster under § 512(a)), aff’d, 239 F.3d 1004;Universal Music Australia Pty Ltd v Sharman License Holdings Ltd [2005] FCA 1242(5 September 2005) (denying Sharman defence under sec 112E of the AustralianCopyright Act, which provides that ‘A person (including a carrier or carriage serviceprovider) who provides facilities for making, or facilitating the making of, a commu-nication is not taken to have authorised any infringement of copyright in an audio-visual item merely because another person uses the facilities so provided to dosomething the right to do which is included in the copyright.’).

38 For example, Ellison v Robertson, 189 F. Supp.2d 1051 (C.D. Cal., 2002), rev’din part, 357 F. 3d 1072 (9th Cir. 2004) (14-day storage of newsgroups is ‘transitory’).

39 See, for example, Cooper v Universal Music Australia Pty. Ltd., infra n.42,[2006] FCAFC 187, which found that an ISP that was aware of the intensive use andcopyright problems of a links site on its service, that gave free web hosting to the site,and that took no steps to prevent the site’s infringement, could not rely on a ‘mere facil-ity’ exception to liability.

40 For example, TONO v Bruvik, Civil Case No. 2004/822 (S. Ct. Norway, 27Jan. 2005); Perfect 10, Inc. v Amazom.com, Inc., supra n.11 (no vicarious liability, nocontributory liability ‘solely because the design of its search engine facilitates such

infringement.41 In the case of so-called ‘deep links’ in particular, courts haverarely found difficulty in finding infringement under some theory becausethese hyperlinks function in the same way in commencing the transmissionand copying of an infringing file regardless of whether the file is located onthe link provider’s own computer or that of another person.

The Australian case of Universal Music Pty. Ltd. v Cooper,42 provides agood example. The defendant website owner was held liable for ‘authorising’user infringement by knowingly designing and organising a large links site ina manner that enabled and facilitated illegal downloading by users and illegaluploading by other sites. The court found that Cooper ‘exhibited a degree ofindifference from which permission ought to be inferred’, by failing to controlhis site and remove links to infringing files.43

Similarly, a Chinese court has found Yahoo! China (owned by the entityAlibaba) liable for ‘assisting infringement’ and ordered it to pay damages andto remove links to infringing music files in its MP3 search engine as well asits Music Box site, which offered users a storage space for such links. Thecourt found no direct infringement on the part of Yahoo! China and ruled thatproviding a searching or linking service would not bring liability if the servicedisconnected the links to an infringing work, performance or phonogram afterreceiving notice from the rights owner. However, such a service would be‘jointly liable for infringement if it is aware of or ought to know that the linkedwork, performance or phonogram product constitutes an infringement’ andfailed to remove the link.44


infringement’, but contributory liability could be imposed if Google ‘had knowledgethat infringing Perfect 10 images were available using its search engine, could takesimple measures to prevent further damage to Perfect 10’s copyrighted works, andfailed to take such steps’). See generally Dixon, Internet Copyright Litigation: Non-USDevelopments, World E-Commerce & IP Report, June 2003, at 5, 6.

41 IFPI Belgium v Beckers, A.R.K. No. 99/594/C (Antwerp Law Courts, 21December 1999), aff’d, Beckers v IFPI Belgium, No. 2000/RK/27 (First Chamber,Court of Appeal, Antwerp, 26 June 2001); KODA, NCB, Dansk Artist Forbund, DanskMusiker Forbund & IFPI Denmark, Case Nos. VL. B-1943-99 and VL. B-2089-99(High Ct. of Justice, Western Div, 20 April 2001).

42 [2005] FCA 971 (Fed. Ct. Australia, 17 Jul. 2005), aff’d, Cooper v UniversalMusic Australia Pty. Ltd. [2006] FCAFC 187 (Fed. Ct. Full Court Appeal, 18December 2006).

43 Id., paras. 77–88.44 Go East Entertainment Co. Ltd. v Beijing Alibaba Information and

Technology Co. Ltd., Civ No. (2007) 02627 Er Zhong Min Chu Zi (Beijing No. 2Intermediate People’s Court, 24 April 2007), aff’d, 2007 Gaomingzhongzi No. 1191(Beijing Higher People’s Court, 20 December 2007). Cf. Gold Label EntertainmentLtd. v Beijing Baidu Network Information Scien-tech Co., Ltd., Civ No. (2005) 7965 YiZhong Min Chu Zi (Beijing No. 1 Intermediate People’s Court, 17 November 2006)(automated MP3 search engine not liable for an injunction or damages where copyrightowners had not sent adequate notices of infringements), aff’d on appeal.

In some cases, courts have found that operating or hosting an unauthorisedlinks site is a breach of the general duty of due care owed to the rights owner.In Stichting BREIN v Techno Design ‘Internet Programming’ BV,45 the Dutchappeals court found that operating an MP3 search engine by which a sitecreated and made available links to unauthorised music files, constituted‘tortious’ activity towards the owners of copyright and neighbouring rights insuch music. The court found that every download of an unauthorised file (evenfor private purposes) also involved a communication that was unauthorised.The court imposed a duty of care based on the fact that the ‘lion’s share’ ofMP3 files on the Internet were unauthorised, most users were searching forunauthorised files, and the defendant knew of and profited from its linking tosuch unauthorised communications.

3. The liability of file-sharing servicesThe most hotly litigated area in the field of third-party liability for on-lineinfringements involves, of course, file sharing. Beginning with the US lawsuitagainst Napster in 1999, there now have been a range of cases not only in theUS but also spanning the Netherlands, Japan, Korea, Taiwan and most notablyAustralia, which together have begun to build up a picture of how and whyfile-sharing services can be held liable for users’ infringements:

• Netherlands: Kazaa v Buma/Stemra.46 In ‘summary proceedings’involving a licensing dispute between peer-to-peer service Kazaa andthe Netherlands authors’ collecting society Buma/Stemra, the societycounterclaimed that Kazaa was violating its member’s copyrights. TheAmsterdam District Court found on 29 November 2001 that Kazaabreached copyright law by giving users the opportunity to downloadmusic files by means of its computer program and network without alicence, and ordered Kazaa to take such measures as to render impossi-ble any communication and copying of the Buma/Stemra repertoire.The Appellate Court of Amsterdam reversed the District Court’s deci-sion on 28 March 2002. The court relied almost exclusively on a last-minute affidavit of a Professor Ir. E. Huizer, who opined that Kazaacould not control the exchange of infringing files and that its softwarehad uses other than to infringe copyright. Due to the nature and appeal


45 Docket No. 1157/04 (Ct. App. Amsterdam, 5th Civ Div, 15 June 2006), over-ruling Techno Design ‘Internet Programming’ BV v BREIN, No. 85489/HA ZA 02-992(D. Ct. Haarlem, 12 May 2004).

46 No. KG 01/2264 OdC (Amsterdam Ct. of Justice, 29 November 2001),reversed, Kazaa v Buma/Stemra, No. 1370/01 (Amsterdam Ct. of Appeal, 28 March2002), aff’d, No. C02/186HR (Netherlands S. Ct. 19 December 2003).

process for ‘summary proceedings’, facts contradictory to thosepresented by Prof. Huizer were not considered by the Appellate Court(but could have been considered subsequently in any substantiveproceedings). This decision was upheld on 19 December 2003 by theNetherlands Supreme Court. Given that the factual record could not bechallenged in the Supreme Court, the Supreme Court issued a procedu-rally focused ruling saying that the Court of Appeals was not wronggiven the facts before it.47

• Japan: Nippon Columbia Co., Ltd et al. v Yugen Kaisha NipponMMO.48 Japan MMO operated a peer-to-peer service used by approxi-mately 42,000 persons, who made available about 80,000 files at anyone time. Like Napster, Japan MMO created an index of files availablefor download, and users transmitted and copied files directly to eachother. The court found, both at the preliminary injunction and ‘inter-locutory judgement’ stage, that Japan MMO and its principal MichioMatsuda were themselves ‘making transmittable’ the files on users’computers, in violation of Japanese copyright law. Japan MMO wasenjoined from offering the service on 9 April 2002, and was foundliable on the merits on 29 January 2003. On 17 December 2003 theTokyo District Court ordered peer-to-peer service Japan MMO to paycompensation of ¥ 36.89 million (US$ 335,000) in total, plus latepayment charges, to RIAJ members and affiliates for infringing their‘making transmittable’ right.

• Korea: Soribada (Asia Media Inc. et al. v Yang et al.). Several civilcases and one criminal case have examined various incarnations of theSoribada file-sharing service, largely finding Soribada liable for assist-ing copyright infringement and subject to civil damages and injunctionsas well as criminal liability. The operators of the original Soribadaservice (Soribada 1), which offered ‘centralised’ file sharing of unau-thorised music files, were indicted by the Korean prosecutor in August2001 and sued civilly by Korean record companies in February 2002.


47 BUMA/STEMRA v Kazaa BV, No. C02/186HR (Netherlands S. Ct. 19December 2003).

48 2002 (Wa) Case No. 4249 (Tokyo District Court, 29th Civil Division, inter-locutory judgement 29 January 2003, damages decision 17 December 2003). See RIAJPress Release, Court decided Japan MMO, a file-sharing service company, for illegal-ity; Interlocutory judgment by the Tokyo District Court, http://www.riaj.com/e/news/20030129.html (29 January 2003); RIAJ Press Release, File-sharingservice company was ordered to pay 37 million Japanese yen; Tokyo District Courtdecided the damages (17 December 2003), http://www.riaj.com/e/whatsnew/20031217.html.

The criminal case initially failed,49 but in July 2002 the civil courtfound Soribada liable because it knew or ought to have known of theinfringements taking place on its service. The court issued an injunctionrequiring the peer-to-peer service to stop letting users download theplaintiffs’ recordings, and to stop operating the service on the KoreanData Centre’s servers.50 This decision was upheld on appeal,51 andSoribada 1 shut. (In January 2005, the court also awarded the musicpublishers’ society KOMCA about 19 million Won (US$ 18,000) forSoribada’s secondary infringement of KOMCA members’ reproductionand transmission rights in about 5,000 songs.)

Soribada reopened in 2004 as a decentralised file-sharing service(Soribada 2), which was improved and expanded into what becameknown as Soribada 3. On 29 August 2005, the Seoul Central DistrictCourt again ordered Soribada to suspend operation of its service anddistribution of the service’s software on the basis that the defendants:

– knew that the service was used for infringement;– had a level of involvement in management and control, in particular

through a log-in function, a points system for ‘sharing’, andcreation and distribution of the software;

– failed to filter infringing files even though they could have done so;and

– made significant profits through banner advertising and the sale ofthe service. 52


49 The criminal case was dismissed on 15 May 2003 on the ground that thecharges did not adequately specify how Soribada aided and abetted copyright infringe-ment. The prosecutor appealed this dismissal to the High Court. On 12 January 2005the High Court rejected the criminal appeal, finding that Soribada had not been givenadequate notice of specific infringements and therefore could not be found aiding andabetting a crime. In re Yang and Yang, Docket 2003 No. 4296 (Seoul D. Ct., Crim. Ct.No. 5, 12 January 2005). The Supreme Court overturned this High Court decision, find-ing that if the developers could expect infringements to occur in their P2P system, theyabetted users’ infringements if they did not stop them. Case 2005 Do 872 (Korea S. Ct.14 December 2007).

50 Asia Media Inc. v Yang, No. 2002KAHAP77 (Suwon D. Court, SeongnamBranch, First Civ Dep’t, 9 July 2002).

51 Sinchon Music Co., Ltd. v Yang, Docket No. 2003 Na 21140 (Seoul High Ct.,Civ Ct. No. 4, 12 January 2005), aff’d, 2005 Da 11626 (Korea S. Ct. 25 January 2007).

52 Korean Assn. of Phonogram Producers v Soribada Inc., Docket No. 2004 KaHap 3491 (Seoul D. Ct., Civ Ct. No. 50, 29 August 2005). See Court Blocks Free File-Sharing Services, Korea Times (31 August 2005), http://search.hankooki.com/times/times_view.php?term=soribada++&path=hankooki3/times/lpage/nation/200508/kt2005083117362711960.htm&media=kt.

The Korean record companies and Soribada settled the case in February2006, with Soribada agreeing to pay 8.5 billion Won in compensation(US$ 8.7 million). Following the settlement, Soribada opened a newcentralised P2P service (Soribada 5) which purported to use filteringtechnologies to prevent infringement of the record companies’ rights. Apreliminary injunction sought by the record companies against thisservice initially failed in August 2006, based on Soribada’s defence thatstopping infringements would be ‘technically impossible’. The HighCourt found on appeal, however, that Soribada had not used requisitebest efforts in filtering out infringing files.53 The parties have sinceentered into a new settlement, and Soribada opened an authorisedsubscription P2P service.

• China Taipei (Taiwan): EzPeer.54 Subscription file-sharing serviceEzPeer was indicted for aiding and abetting infringement, and sued forcivil copyright infringement. EzPeer was a centralised peer-to-peerservice in Taiwan that charged users for ‘file sharing’ of music, film andsoftware files. IFPI Taiwan secured a civil injunction on 11 December2003 requiring EzPeer to remove 105 infringing Chinese repertoiretracks from its service. The Shih-Lin District Court dismissed the crim-inal case against EzPeer principals on 30 June 2005, finding amongother things that the defendants did not have the requisite criminalintent or knowledge to be deemed accessories to users’ crimes. Severalindividuals also were indicted, found guilty and sentenced for illegallyreproducing MP3 files from the EzPeer and Kuro services. IFPI andEzPeer reached a civil settlement in June 2006. EzPeer shut down itsunauthorised file-sharing service, and set up a licensed and digitalrights management protected service called EzPeer+.55

• China Taipei (Taiwan): Kuro.56 In December 2003, subscription file-sharing service Kuro was indicted for aiding and abetting infringement;civil infringement proceedings were also brought. Kuro was acentralised peer-to-peer service in Taiwan that charged users for filesharing music files. Kuro’s CEO and President (brothers Chen), and theChen brothers’ father (deemed a ‘legally responsible’ person) wereindicted on 1 December 2003 for aiding and abetting unauthorised


53 No. 2006 Kahap/535 (Seoul D. Ct. 22 August 2006), rev’d, No. 2006/a 1535(Seoul H. Ct. 10 October 2007).

54 Global Digital Technology Co., Ltd., 2002 Zhen Zi No. 10786 and No. 4559(Shih-Lin (Taiwan) Dist. Ct. 30 June 2005).

55 G. Kennedy & S. Doyle, Pacific Rim News, 23 Computer L. & Sec. Rep.152–153 (2007).

56 Fashion Now Ltd., 92 Suit No. 2146 (Taipei (Taiwan) Dist. Ct.).

reproduction of sound recordings. On 9 September 2005, the Taipeidistrict court found that the service operators jointly (with users)infringed the record companies’ copyrights, having provided users themeans of illegal reproduction, ‘obviously foreseen’ and known of users’infringing acts, ‘shared’ acts of searching and downloading with users,promoted the software and services for such purposes, and earnedsubscription fees from the service. As such, the service operators hadcriminal intent, and the requisite association of mind and participatingacts with its users.57 On the civil side, IFPI Taiwan secured an injunc-tion requiring Kuro to remove 105 infringing tracks from its service on2 April 2004. The parties reached a settlement in September 2006, bywhich Kuro agreed to close its P2P service, stop distributing its soft-ware and pay a substantial sum in damages.58

• Australia: Universal Music Australia Pty Ltd v Sharman LicenseHoldings Ltd.59 Following an extensive ‘dawn raid’ on 6 February2004, Australian record companies brought infringement proceedingsagainst 10 companies and individuals related to the Kazaa peer-to-peerservice. The case alleged that these parties were engaged in the promo-tion, facilitation and authorisation of the illegal copying of musicthrough the use of Kazaa’s software and service in Australia. The liabil-ity hearing took place from 29 November to 17 December 2004. On 5September 2005, the federal court found six of the respondents liable for‘authorising’ user infringement, on the basis of several findings:

– provision and maintenance of the means (‘facilities’) for infringe-ment;

– knowledge of infringements (the defendants had ‘long known’ thatthe system was ‘widely used’ for sharing copyright files);

– encouraging infringement through positive acts such as web-sitemessages and a ‘Join the Revolution’ marketing campaign;

– the ‘primary’, ‘major’ or ‘predominant’ use of the system was forthe sharing of copyright-infringing material;


57 Press Release re Kuro Case, Taipei District Court (9 September 2005); PressRelease, Taiwan Intellectual Property Office, On September 9, the Taipei District Courtconvicted Kuro and one of its subscription members (9 September 2005),http://www.tipo.gov.tw/eng/press/ne20050909.asp. The Taiwan High Court upheld thisjudgement in July 2008.

58 IFPI, Press Release: Taiwan’s Kuro in substantial settlement with recordingindustry (14 September 2006), http://www.ifpi.org/content/section_news/20060914.html.

59 [2005] FCA 1242 (5 September 2005), http://www.austlii.edu.au/au/cases/cth/federal_ct/2005/1242.html.

– financial interest of the defendants in maximising infringement (forthere to be ‘ever increasing’ file-sharing and users);

– failure to take steps to prevent or curtail infringement (warningswere inadequate, filtering was possible but not implemented).

The defendants found liable were ordered to stop authorising infringe-ment, which would be met by implementing a filter for infringing musictracks; to pay 90 per cent of the plaintiffs’ costs; and to come back tocourt for a damages hearing. The parties settled the litigation in July2006, with the defendants paying a reported US$100 million in settle-ment damages to record company claimants and agreeing to filter theirservice.60

• Netherlands: Stichting BREIN v Leaseweb BV.61 The defendant ISPwas hosting a customer (Everlasting) that operated a ‘BitTorrent’ site, arecent hybrid of links and file sharing by which Torrent files point usersto particular content files and ‘tracker’ sites coordinate the simultane-ous uploading and downloading of those files between numerous usersof the BitTorrent software. Without deciding at the preliminary injunc-tion stage whether the customer’s site violated copyright, the courtfound that ‘Everlasting structurally facilitates the infringement of copy-rights and neighbouring rights and ... (the holder of) Everlasting mustbe aware of this. Everlasting’s conduct therefore is unlawful, because itis contrary to the principle of due care that must be observed vis-à-visthose entitled to copyrights.’62


60 Kazaa to pay record groups $100m, Financial Times (27 July 2006); IFPI,Press Release: KAZAA settles with record industry and goes legitimate (27 July 2006),http://www.ifpi.org/content/section_resources/piracy-report-current.html.

61 No. 369220 / KG ZA 07-850 AB/MV (D. Ct. Amsterdam, Civ Sector, 21 June2007), aff’d, LJN: BD 6223, Amsterdam Court, 106.007.074/01KG (Amsterdam Ct.App. 3 July 2008).

62 Id., para. 5.4. Accord, Stichting BREIN v KPN, No. 276747 / KG ZA 06-1417,para. 4.4 (Hague Ct., 5 January 2007):

[The BitTorrent site operator is] ‘facilitating structural infringements of copyrightsand neighbouring rights. In light of the nature of the files alone, it cannot be other-wise than that the Website Owner is aware of this. It is furthermore relevant thatincome is being generated by means of the website because – before being able todownload torrents – a user is required to pay a certain amount. In these circum-stances it must be concluded for the present that the Website Owner’s actions arewrongful, not because the Website Owner is infringing the copyrights or neigh-bouring rights vested in the rightful owners, but because its actions conflict with thedue care that must be observed towards the rightful owners.’

4. Third-party injunctionsAnother development in this area has been the willingness of courts interna-tionally to issue orders against Internet service providers and other thirdparties to put a stop to infringers’ Internet activities. Thus for example,German courts have held Internet account holders responsible for copyrightinfringements claimed to be conducted by others using their accounts,63

enjoined an auction site to cut off offers that infringe trademark,64 enjoined aneDonkey file-sharing server operator from allowing the making available ofinfringing music files from his server,65 and enjoined payment-systemproviders from conducting transactions on behalf of an infringing website.66

In the same vein, French courts have ordered ISPs to cut off more than 100subscribers’ Internet accounts found to be involved in unauthorised file shar-ing.67 The Danish Supreme Court ordered service provider TDC, the country’slargest telecommunications provider, to terminate the Internet connections oftwo individuals on the TDC service that were offering infringing music filesfrom FTP servers.68 And in the Netherlands Leaseweb case, the court orderedthe ISP to disclose the customer’s identification and remove his BitTorrent sitefrom its service.69

5. Filtering or blockingCourts increasingly have proved willing to grant injunctions that include arequirement that a service provider filter or block infringing files or other


63 Order in Interlocutory Injunction Proceedings, No. 308 O 58/06 (Civ.Chamber 8, Hamburg Landgericht, 25 January 2006) (‘he is the owner of the Internetconnection . . . and no fault is necessary for the restraining order demand’); Order inInterlocutory Injunction Proceedings, No. 308 O 41/06 (Civ. Chamber 8, HamburgLandgericht, 18 January 2006) (‘when he makes his Internet connection available to hisunderage son, he …has the duty .. to stop illegal conduct’).

64 Montres Rolex v Ricardo, I ZR 304/01 (Germany Supreme Civil Ct. (BGH),11 March 2004).

65 Universal Music GmbH v Rac, No. 308 O 273/07 (Hamburg D. Ct., Civ. Div.No. 8, 24 April 2007).

66 Judgement, No. 27 O 836/04 (Berlin Regional Ct., 23 November 2004).67 See IFPI, Breakdown of legal cases against illegal file-sharing, http://www.

ifpi.org/site-content/press/20060404a.html.68 TDC v IFPI, No. 40/2005 (Denmark S. Ct., 10 Febuary 2006) (failure to

impose such an injunction would violate Art. 8(3) of the EU Copyright Directive);Danish Court Tells ISPs To Cut Pirates’ Connections, Billboard.Biz (15 February2006), http://www.billboard.biz/bb/biz/newsroom/legal_management/article_display.jsp?vnu_content_id=1002033151.

69 Stichting BREIN v Leaseweb BV, supra n. 60, paras. 7.1–7.2; accord, StichtingBREIN v KPN, supra n. 61, para. 4.15 (ISP would breach its own duty of care by notdisconnecting the customer’s BitTorrent site).

activities as a remedy for infringements found – whether or not the serviceitself is deemed to be a primary infringer or a third party liable for its users’infringements.

In the Napster70 and Sharman71 cases, in which the courts found serviceproviders liable for promoting or authorising their users’ infringements, thecourts had no difficulty in imposing a filtering obligation on the service as aremedy for the infringement. (Remember that failure to filter itself may beevidence, albeit not conclusive evidence, of the service’s liability in the firstplace.72)

Likewise, in IFPI Danmark v Tele2 A/S,73 a Danish court issued a targetedinjunction requiring an ISP to block access to the Russia-based music down-load service allofmp3.com. The court found that not only was the Russian siteoffering music files to the ISP’s Danish customers without authorisation, butthe ISP itself was infringing the plaintiffs’ copyright by transmitting thosefiles.


70 Napster, supra n. 37, 239 F.3d at 1027: ‘Napster has both the ability to use itssearch function to identify infringing musical recordings and the right to bar participa-tion of users who engage in the transmission of infringing files….Napster … bears theburden of policing the system within the limits of the system.’

71 Order para. 5, Universal Music Australia Pty. Ltd. v Sharman LicenseHoldings Ltd, supra n. 59:

‘5. Continuation of the Kazaa Internet file-sharing system (including the provisionof software programs to new users) shall not be regarded as a contravention of order4 if that system is first modified pursuant to a protocol, to be agreed between theinfringing respondents and the applicants or to be approved by the Court, thatensures either of the following situations:(i): that:(a) the software program received by all new users of the Kazaa file-sharing systemcontains non-optional key-word filter technology that excludes from the displayedblue file search results all works identified (by titles, composers’ or performers’names or otherwise) in such lists of their copyright works as may be provided, andperiodically updated, by any of the applicants; and(b) all future versions of the Kazaa file-sharing system contain the said non-optionalkey-word filter technology; and(c) maximum pressure is placed on existing users, by the use of dialogue boxes onthe Kazaa website, to upgrade their existing Kazaa software program to a newversion of the program containing the said non-optional key-word filter technology;or(ii) that the TopSearch component of the Kazaa system will provide, in answer to arequest for a work identified in any such list, search results that are limited tolicensed works and warnings against copyright infringement and that will excludeprovision of a copy of any such identified work.’72 See e.g., Grokster, supra n. 10; Sharman, supra n. 58.73 Case No. FI-15124/2006 (Copenhagen City Ct., 25 October 2006).

US copyright law,74 EU copyright directives75 and many countries’ generallaw in principle also would permit an injunction requiring a service providerto filter or block infringing material or activities of sites or users on its system,even without a finding that the service provider itself was liable for theinfringement.

While injunctions covering particular sites or users would be the expectednorm in this area as well, the recent Belgian case SABAM v SA Scarlet76 illus-trates the extent to which one court was willing to go in requiring a serviceprovider to implement broad filtering of Internet traffic. The Belgian musicpublishers’ collecting society SABAM sought and obtained an injunctionrequiring the ISP Scarlet (previously known as Tiscali) to prevent itscustomers from the unauthorised sending or receiving via peer-to-peer appli-cations of any electronic files containing musical works represented bySABAM. The court’s expert witness had analysed various technical filteringsystems, which the Court found could provide effective measures to recogniseand prevent up to 90 per cent of such copyright infringements at the ISP level(a finding that the ISP has challenged on appeal).

In its ruling the court found that such filtering could recognise 90 per centof the illegal music files exchanged on the Internet, and could be scaled up todeal with Scarlet’s large volume of Internet traffic. The court rejected Scarlet’sobjections about future encrypted files as remote and speculative, about cost


74 17 U.S.C. § 512(j) (permitting injunctions requiring even ‘mere conduit’ ISPsto block account access or foreign sites even though the ISP is not liable for damages).

75 Art. 8(3), Directive 2001/29/EC of the European Parliament and of theCouncil of 22 May 2001 on the harmonisation of certain aspects of copyright andrelated rights in the information society, Official Journal L 167/10, 22/06/2001 P.0010–0019 (‘EU Copyright Directive’):

‘Member States shall ensure that rightholders are in a position to apply for aninjunction against intermediaries whose services are used by a third party to infringea copyright or related right.’

E-Commerce Directive, supra n. 3, recital 40:‘[S]ervice providers have a duty to act, under certain circumstances, with a view topreventing or stopping illegal activities….the provisions of this Directive relating toliability should not preclude the development and effective operation, by the differ-ent interested parties, of technical systems of protection and identification and oftechnical surveillance instruments made possible by digital technology within thelimits laid down by Directives 95/46/EC and 97/66/EC.’

Id. recital 45:‘The limitations of the liability of intermediary service providers established in thisDirective do not affect the possibility of injunctions of different kinds; such injunc-tions can in particular consist of orders by courts or administrative authoritiesrequiring the termination or prevention of any infringement, including the removalof illegal information or the disabling of access to it.’76 No. 04/8975 A of the General Roll (D. Ct. Brussels 28 June 2007).

concerns (Û0.50 per user per month) as ultimately payable by the users of theservice and not excessive, and about possible ‘false positives’ as insufficientreason not to issue the injunction.

The court’s analysis in SABAM makes clear that the normal issues relevantto any injunction – such as its efficacy, technical feasibility, and economicreasonableness – will be equally relevant to any specific requirement to filter.The court also found that such an injunction did not impose a general moni-toring requirement, did not impose liability on the service provider or eviscer-ate its general exemption from liability, and did not violate privacy laws.

LEGISLATIVE TRENDS

Some proposed legislation to deal with third-party copyright liability gener-ally, or peer-to-peer activities specifically, have started to appear after a fairlylong gap that followed the development of the original ISP liability-limitationrules in the late 1990s.

• US. The 2004 US ‘Induce Act’ proposal77 was subject to intense criti-cism and went nowhere, as did calls to change contributory-liabilityrules in the US following the Grokster decision.

• European Union. The European Commission’s 2005 and 2006 propos-als for a criminal-enforcement directive for intellectual propertyincluded a provision to criminalise ‘attempting, aiding or abetting andinciting’ infringements ‘on a commercial scale’78 – a fairly standardaccomplice-liability provision.

• France. The French legislature enacted amendments to the copyrightlaw in 2006 that appear to be directed specifically at publishers of file-sharing software. The law imposes a fine of Û300,000 and three yearsimprisonment on those who provide software ‘obviously intended to


77 S. 2560 (22 June 2004), http://thomas.loc.gov/cgi-bin/query/z?c108:S.2560.78 Amended proposal for a Directive of the European Parliament and of the

Council on criminal measures aimed at ensuring the enforcement of intellectual prop-erty rights, No. 2005/0127 (COD), COM (2006) 168 final (26 April 2006). TheEuropean Parliament has recommended that this be amended to read as follows:‘Member States shall ensure that all intentional infringements of an intellectual prop-erty right on a commercial scale, and aiding or abetting and inciting the actual infringe-ment, are treated as criminal offences.’ Position of the European Parliament adopted atfirst reading on 25 April 2007 with a view to the adoption of Directive 2007/.../EC ofthe European Parliament and of the Council on criminal measures aimed at ensuringthe enforcement of intellectual property rights. This proposed directive is still underconsideration.

make available to the public unauthorised works or protected objects’.79

The law also allows the court to order ‘any measures necessary’ toprotect the copyright, so long as such measures ‘conform to the state ofthe art’ and do not affect ‘the essential characteristics or the initial desti-nation of the software’.80 Much remains unclear about the meaning ofthese amendments and how they will be applied.

• Korea. The 2006 Copyright Act of Korea contains a provision requir-ing certain ‘special types’ of ‘on-line service providers’ (those that‘mainly enable people to transmit literary works among themselvesusing computers’ – a reference to peer-to-peer services) to take ‘neces-sary measures such as blocking illegal transmission’ of covered workswhen requested by the right holder.81 A June 2007 presidential decreespecifies the notice requirements for such requests, and defines ‘neces-sary measures’ as technical measures for identifying and filteringinfringing content and sending warning notices with respect thereto.82

The Ministry of Culture and Tourism’s July 2007 notification definesthe covered ‘special types’ of on-line services as including P2P serviceor program providers who receive payment or other commercial bene-fit, who give their users such a benefit or convenience, or who providea program ‘purported mainly’ for searching and transmitting worksstored in an individual or company’s computer.83

• Taiwan. Taiwan’s Legislative Yuan passed an amendment to itsCopyright Law in June 2007 making it illegal to provide software orother technology that enables the transmission or reproduction of copy-righted works ‘with the intention’ to facilitate unauthorised transmission


79 Code de la propriété intellectuelle (France), Art. 335-2-1, http://www.celog.fr/cpi/lv3_tt3.htm#c5.

80 Id., Art. L. 336-1.81 Korea Copyright Act, art. 104:‘Article 104 (Duty of online service providers of special types, etc.)

(1) Online service providers that mainly enable people to transmit literary works,etc. among themselves using computers, etc. (hereinafter ‘online service providersof special types’) shall take necessary measures such as blocking illegal transmis-sion of said literary works, etc. when requested by the right holder. In this case,matters regarding requests by right holders and necessary measures shall be deter-mined by a Presidential Decree.(2) The Minister of Culture and Tourism may specify and notify the scope of specialtypes of online service providers as defined under Paragraph 1.’82 Proposed Amendment to the Enforcement Decree of the Copyright Act,

Presidential Decree No. 20135 (Korea) (29 June 2007).83 Ministry of Culture and Tourism (Korea), Public Notification No. 2007-24 (6

July 2007).

or reproduction. Such intention can be found where the provider adver-tises or takes ‘other positive measures to abet, induce, procure orpersuade the public’ to infringe.84

SOLUTIONS?

Factors for Future Cases

Lawyers in the US and Commonwealth and civil law jurisdictions have pridedthemselves on knowing and applying discrete rubrics and doctrines for find-ing third parties liable for users’ infringements, but it is increasingly apparentthat:

• these doctrines overlap;• particular tests such as ‘authorisation’ are being interpreted more

broadly and even differently than their literal meaning;• courts are applying a broader set of considerations in determining third-

party liability regardless of the rubric chosen; and• these trends can be seen in all three types of legal traditions, with simi-

lar results.

In the US, for example, the pre-Grokster debate was whether the doctrine ofcontributory liability applied where the third party file-sharing servicearguably knew about, intentionally facilitated, promoted and benefitted fromuser infringements, but had tried to put himself beyond any real-time controlof user activities, and could articulate at least theoretical non-infringing usesof his service.85 The defendants argued that the element of control (or at least


84 Art. 87(7), Taiwan Copyright Act (promulgated 11 July 2007):‘Provision of computer programs or other technologies that enable the public topublicly transmit or reproduce copyrighted works, with the intent to facilitate thepublic, via the Internet, to publicly transmit or reproduce other’s works withoutapproval or authorization of the economic rights holder, thus infringing on theeconomic rights of others and thereby gaining profits.Person engages in the activity as described in Subparagraph 7 of the preceding para-graph, shall be deemed with the intent as referred to in that subparagraph shall thesaid person advertise or take other positive measures to abet, induce, procure orpersuade the public to utilize a computer program or other technology to infringeon the economic rights of others.’85 The district court noted that the defendants in the Grokster case ‘may have

intentionally structured their businesses to avoid secondary liability for copyrightinfringement, while benefiting financially from the illicit draw of their wares.’ Metro-

file-by-file, post facto control) of the contributory liability doctrine was notmet. They also argued that any non-infringing use would also defeat a findingof liability under the Sony doctrine.

Nevertheless, not a single member of the Supreme Court would letGrokster off. Appealing to older formulations of third-party liability rules thatincluded ‘inducing’ infringement,86 the court found that a third party could befound liable if he promoted infringement. That promotion need not be subjec-tive or overt – it could be proved from more than one objective activity ofcommunication (soliciting infringing users), failure to prevent or curtailinfringement (that is, to filter), or profiting from the infringement. In suchcircumstances, actual or potential lawful use, even if substantial, was nodefence.

In the Commonwealth, commentators likewise have agonised over theboundaries of the doctrine of ‘authorising’ infringement,87 probably unneces-sarily. For one thing, ‘authorising’ infringement is not, as we have seen, theexclusive rubric under which third parties can be held liable for users’infringements. Doctrines of joint tortfeasorship, inciting, aiding and abettingand the like have equal footing to authorisation as bases for third-party liabil-ity, and as the commentators note, liability can be and sometimes is foundedon more than one theory.88

Moreover, courts in the Commonwealth have rarely taken the word ‘autho-risation’ literally. As a practical matter, doing so would make the offencenearly meaningless. It is rare to find a major infringer that has overtly toldusers to do something illegal – any sensible third party would not be caughtdead doing so. Courts therefore have interpreted the term ‘authorisation’ morebroadly to include activities with similar intent or effect – ‘countenancing’,‘counselling’, ‘aiding’, ‘controlling’, ‘inducing’, and even ‘inactivity or indif-ference’ to a degree from which authorisation, promotion or permission maybe inferred.


Goldwyn-Mayer Studios Inc., v Grokster, Ltd., 259 F. Supp. 2d 1029, 1037 (C.D. Cal2003), aff’d, 380 F.3d 1154 (9th Cir. 2004), rev’d, No. 04-480, at 1 (S. Ct. 27 June2005).

86 E.g. Kalem Co. v Harper Brothers, 222 U.S. 55, 62-63 (S. Ct. 1911) (defen-dant that ‘not only expected but invoked [infringing use] by advertisement’ was liablefor infringement ‘on principles recognised in every part of the law.’)

87 E.g. Laddie, Prescott and Vitoria, The Modern Law of Copyrights andDesigns, 3rd ed., London: Butterworths 2000. §§ 39.14, at 1772 (‘the breadth of this[authorisation] tort is unclear, and some of the cases, mostly concerned with copyright,are hard to reconcile with one another’).

88 Id. § 39.18, at 1777 (‘in a number of cases in which a defendant has beenfound guilty of authorising infringement he could have been held to have committedinfringement either vicariously or as a joint tortfeasor’).

Elements of ‘knowledge’ are likewise interpreted broadly. Third parties putin the dock seem surprisingly ignorant about users’ infringements, howeverrampant or blatant. Courts thus have interpreted elements of knowledge toinclude situations where the third party ‘should have known’ of the infringe-ment or the likely effects of the third party’s actions.

In civil law countries, the results are similar. It was not at all surprising thatthe Dutch district court found Kazaa to be liable for users’ infringements – inthe court’s mind Kazaa owed a duty of care not to assist users in such wide-spread illegal activity and could be ordered to stop doing so. It was only whenthe Court of Appeals got Professor Huizer’s opinion – that Kazaa was unableto control the unlawful exchange of infringing files purportedly because it wasimpossible to recognise which files contained copyrighted material (assertionsthat Buma/Stemra inexplicably did not refute) – that liability was dismissed.89

Consistent Application of Common Elements

What seems to have emerged is that regardless of the particular law, liabilityrubric, technology or activity involved in a case, courts consider evidence ona common set of elements in determining whether a third party is sufficientlyconnected with infringement to be deemed culpable himself. These elementsare principally the following:

• Relationship of the third party with the user. Sometimes expressed interms of ‘control’ or ‘causation’, this element relates to the actual orpotential influence that the third party has over the user himself.

• Extent of the third party’s involvement. This looks at the connectionbetween the third party and the user activity that constitutes infringe-ment. This may involve the third party promoting the infringement(‘sanctioning’, ‘countenancing’, ‘causing’); participating in preparatory,auxiliary or subsequent acts; providing the ‘means’ of infringement; ormaintaining ongoing contact with the infringer, such as through theprovision of services.

• Knowledge of infringing activities. As in other areas of law, knowledgethat copyright infringement is illegal is not required, but complete igno-rance as to an infringer’s activity is not likely to raise third-party liabil-ity. Actual, real-time knowledge of individual acts of infringement is notrequired; knowledge will be imputed where the third-party ‘should haveknown’ the likely behaviour of the user.


89 Declaration of Professor Dr. Ir. E. Huizer (18 February 2002), Kazaa vBuma/Stemra, supra n. 46.

• Intention of the third party. It is typically relevant whether a third partyintended that one or more users engage in behaviour that infringes copy-right. Given that third parties in the dock never admit this was theirintention, courts can determine intention on the basis of oral and behav-ioural evidence that encourages infringement, even including inactivityor indifference of such a nature that a certain desired result may beinferred.

• Extent of infringement and lawful activities. This element evaluateswhether there is ‘substantial non-infringing use’, or a primary use forinfringement. The greater the proportion of infringing activity vis-à-vislegal activity that flows from a third-party’s acts, the more likely courtswill be to find third-party liability.90

• Financial or other benefit of third party. The more that a third partyprofits from user infringement, particularly if the third-party’s businessmodel depends on infringement or is not viable in the absence ofinfringement, the more likely liability will attach.

• Ability to prevent or deter infringement. If the very nature of a thirdparty’s activity or technology (for example, a stand-alone cassette orvideo recorder) is such that the third party in fact cannot preventinfringement, courts have been unlikely to find liability absent othercountervailing factors. Courts have recognised, however, that in situa-tions like library copying or file-sharing services, the third party may infact have the ability – either beforehand, as user infringements happen,or even afterwards – to prevent or deter those infringements.

• Due care of third party. The element of due care – already a commonfeature of civil law jurisprudence – has also begun to appear in US andCommonwealth legislation and cases. Internet service providers mustimplement certain responsible practices to benefit from liability exemp-tions in the US.91 Failing to implement filtering technology92 or blind-


90 The actual level of non-infringing use is a determination of fact which at timesdefendants have even sought to adjust artificially during litigation. See, e.g., StichtingBREIN v Leaseweb, supra n. 61, para. 2.5:

On 14 May 2007, the following was posted on Everlasting:‘Hello everybody, This afternoon I was called by the provider of the server. He toldme that he had been warned by BREIN about our site. At that time, this man washaving a meeting with the company’s lawyer…The lawyer recommended that Iupload some personal files, such as some nice photographs you once made orrecipes etc, as long as they are NOT copyright protected….’91 See 17 U.S.C., supra n. 2, § 512(i) (policies against infringement, accom-

modation of standard technical protections). 92 Grokster, supra n. 10; Sharman, supra n. 59.

ing oneself to infringement93 have also been condemned as failures ofdue care.

• Cost-benefit analysis. Legislators and courts have seemed unwilling toimpose liability on technology providers, service providers and otherthird parties where the benefit of preventing or deterring copyrightinfringement is outweighed by technologically infeasible or economi-cally unreasonable requirements such as third party.94

Application of this multi-factor analysis to the leading cases is instructive:

It seems clear from these cases that no one factor itself will impute liability,but the strong presence of two or more accumulated elements ties a third partymore closely to the infringement in ways that courts may find sufficient to


93 E.g. In re Aimster Copyright Litigation, 334 F.3d 643 (2d. Cir. 2003).94 E.g. 17 U.S.C.§ 512(i)(2)(C) (service providers must accommodate certain

technical protections that ‘do not impose substantial costs on service providers orsubstantial burdens on their systems or networks’); In re Aimster Litigation, supra n.92 (‘if the infringing uses are substantial then to avoid liability as a contributoryinfringer the provider of the service must show that it would have been disproportion-ately costly for him to eliminate or at least reduce substantially the infringing uses’).

Figure 1.1 Factors in court decisions

impose liability on the third party. For example, ‘merely’ describing in a maga-zine how to copy music illegally and asking ‘Why buy spend $10 on the latestDavid Bowie album when you can tape it?’ may indicate intention to assist orpromote infringement, but without any further evidence of some relationshipwith the user, financial benefit or further involvement with any particularcopying, making such a publication may not result in liability.95

Releasing a generic product or service like a cassette duplicator or VCRthat has primarily or substantial non-infringing uses, where there is no furtherinvolvement with the users, no express or implied promotion of infringement,and no benefit that can be tied directly or indirectly to the infringement, hasnot resulted in third-party liability to the manufacturers, even where these thirdparties knew or should have known that users would engage in infringementfrom time to time.96

On the other hand, even though a particular peer-to-peer service might beused for non-infringing purposes, where it was mostly used by users forinfringement, and the third party had actual or imputed knowledge of userinfringement, promoted the service for such purposes, got a financial benefitand engaged in an on-going connection with users, with inadequate (or no)efforts to prevent or reduce infringement, such a third party will likely be heldliable for users’ infringements.97

Regardless of the liability theory articulated, therefore, it is likely that manyor all of these factors will continue to be the elements that courts will weighin deciding whether to impute liability to third parties for activities like ‘filesharing’.

Defunct Defences

In the area of litigation against peer-to-peer services, it appears that several ofthe defences commonly raised by such services are on their way to extinction.These are the following:

• The Frankenstein defence: ‘I’ve created a monster that has gone on therampage and now I can’t control it.’ This type of defence has been effec-tively rejected in the Aimster and Sharman litigation.

• The Einstein defence: ‘This system is so complicated that the court andeven I, the service operator, cannot understand it.’ This was also rejectedin the Sharman litigation.


95 See RCA Corp. v John Fairfax and Sons Ltd., [1981] 1 NSWLR 251(Australia).

96 Sony, supra n. 7; Amstrad, supra n. 17.97 Grokster, supra n. 10; Sharman, supra n. 59.

• The Land-of-Far-Far-Away defence: ‘This system was created inHolland, Denmark and Estonia, is run out of Vanuatu, and operates allover the world. Nothing you do can stop it.’ The judge in the Sharmanlitigation had no problem in issuing a judgement against the service inhis own country.

• The Scintilla defence: ‘This service is (well, perhaps, could be) used formatchmaking, real estate listings and political communication amongChinese dissidents. So you can’t touch the massive infringement.’ Thisdefence was rejected both in Grokster and Sharman.

• The Wink-Wink defence: ‘We did tell users that the service was ‘100per cent legal’ but also told them they really shouldn’t violate copyright,know what I mean, know what I mean?’ The judges in Soribada andSharman rejected this defence as well.

Getting Beyond the Myths to the Facts

All of this points to a final theme that runs through the international litigationin this area: solid, evidentiary proof is crucial. There is so much mythology,unsubstantiated rhetoric, and unexamined assumption floating around in areaslike file sharing, that detailed and possibly expensive proof of the underlyingfacts will make or break any case in this area.

In the Dutch Kazaa case, for example, an unchallenged academic opinionthat Kazaa could not control infringements98 was enough to defeatBuma/Stemra’s motion for summary judgement on the issue of third-partyliability. Detailed courtroom evidence in the recording industry’s case againstSharman in Australia, which involved the same underlying Kazaa file-sharingsystem, proved the opposite – the system could have been designed to controlinfringing activities, and could even be altered after-the-fact with a filter to doso. On the basis of this and other detailed evidence submitted on the issuesdescribed above, the record companies won their case in Australia againstSharman.

CONCLUSION

The area of third-party liability with respect to Internet activities like file shar-ing seem to have gone through a phase of ‘de-mythologising’. In the US,Commonwealth and civil law jurisdictions, judges seem to be having littletrouble in applying long-standing legal doctrines of third-party liability in a


98 See supra n. 89 and accompanying text.

technology-neutral way. A common set of elements is in play wherever thesecases arise. None of these elements on its own typically results in liability, butas more elements are proved in a particular case, culpability may be found.And, as ever, truth is only what can be proved in the courtroom – an axiomthat is as true in the area of third-party copyright liability as in any other areaof the law.


2. Legal issues in peer-to-peerfile sharing, focusing on the makingavailable right

Michael Schlesinger*

The Internet must not become a high-tech Wild West, a lawless zone where outlawscan pillage works with abandon or, worse, trade in them in total impunity.

– Nicolas Sarkozy, President of France

I think the failure of ISPs to engage in the fight against piracy, to date, has been thesingle biggest failure in the digital music market.

– Paul McGuinness,1 manager, U2

OVERVIEW

Peer-to-peer file sharing has had a profound effect on the copyright industriesin recent years, especially the music industry, creating legal questions surround-ing liability for illegal distribution of copyright materials online. Indeed, inmany countries, existing exclusive rights under copyright, or slightly modifiedrights, comprise all the chief activities undertaken in the course of a P2P trans-action – largely through implementation of the interactive ‘making available’

43

* Michael Schlesinger is Of Counsel to the law firm of Greenberg Traurig LLPin Washington, DC. Mr. Schlesinger also serves as Professorial Lecturer in Law atGeorge Washington University School of Law and is a Lecturer at the MunichIntellectual Property Law Center (MIPLC). He represents the International IntellectualProperty Alliance (IIPA). The views expressed in this chapter are solely those of theauthor, and are not necessarily endorsed by Greenberg Traurig LLP, GWU School ofLaw, MIPLC, or the IIPA. Mr. Schlesinger can be reached at [email protected].

1 One more quote could be added to these, that of John F. Smith, President,International Federation of Musicians (FIM): ‘ISPs are the gatekeepers of the Internet– they have the technical means and the moral responsibility to play an important rolein protecting copyrighted content on their networks and to ensure that performersreceive fair remuneration for the sale and use of their work on those networks.’

right. The touchstone of this interactive right, as supported by case law in mostcountries, is that a work can be made available to others in a manner such thatthey may access it from a time and place chosen by them, and nothing more(that is, even if the specificity of the onward transmission is not proven). Thefuture for copyright industries depends on the continued robustness of suchexclusive rights in the digital environment, preservation or confirmation ofsecondary liability for copyright infringements online, and the continued orincreasing cooperation of service providers.

P2P FILE SHARING: IS IT TOO LATE TO SAVE THEMUSIC INDUSTRY?

In IFPI’s Digital Music Report 2008,2 the international record industry’s groupreported that ‘music sales via online and mobile channels have risen from zeroto an estimated US$2.9 billion [representing a roughly 40 per cent increase on2006 (US$2.1 billion)] – 15 per cent of industry sales – over the last five years,making music more digitally advanced than any entertainment sector exceptgames.’3 However, that report also indicated that ‘[t]ens of billions of illegalfiles were swapped in 2007,’ and ‘[t]he ratio of unlicensed tracks downloadedto legal tracks sold is about 20 to 1.’ In addition, third-party studies show thatillegal file sharing results in less legitimate copyright products purchased,4 anassertion supported by the following fact: the growth rate of around 40 per centin digital sales of music did not offset the sharp fall in music CD sales globally,meaning that the overall market for 2007 declined compared with 2006.

It’s a complicated picture – one in which more than 500 legitimate digitalmusic services worldwide offer over 6 million tracks, with legal music down-loads up 40 per cent; yet up to 80 per cent of ISP traffic still comprises distri-bution of copyright-infringing files. Expansion of broadband, particularly indeveloping markets like China, Southeast Asia and Latin America, is drivingan increase in unauthorized file sharing on P2P networks. The first spectres oflarge-scale mobile telephone music piracy have emerged in countries like


2 Digital Music Report 2008, 24 January 2008, at http://www.ifpi.org/content/section_resources/dmr2008.html.

3 In the world’s biggest digital music market, the US, online and mobile salesnow account for 30 per cent of all revenues, according to IFPI.

4 Id. (reporting that ‘Italy’s Luigi Einaudi Foundation in 2007 found that 30 percent of peer-to-peer users bought fewer CDs and DVDs, while only 6 per cent said theybought more CDs,’ and ‘In Australia, research undertaken for ARIA (February 2007)shows that 57 per cent of P2P downloaders rarely or never purchase the music theydownload – pointing to straight substitution of legitimate sales’).

Japan (with more than one third of all mobile users admitting to regular ille-gal downloading on mobile networks) and in Southeast Asia, where mobiletechnologies are ubiquitous, but legal services remain sparse.

In Europe, illegal file sharing of copyright materials has proliferated inrecent years; however, where good cooperation in enforcing copyright exists,the rate of Internet users regularly sharing files illegally has remained rela-tively low. Contrast that with countries that have little or no enforcement in theonline space, like in the Netherlands and Spain, and the rates of illegal filesharing are greater: 28 per cent and 35 per cent, respectively, of Internet usersregularly engage in illegal file sharing.

THE P2P LEGAL ENVIRONMENT: IMPLEMENTING THE‘MAKING AVAILABLE’ RIGHT

While one aspect of P2P file sharing will always involve reproduction on thereceiving end, the crucial part is the sender making available the work orobject of related rights. Thus, unquestionably, one of the most importantresults of the adoption of the World Intellectual Property Organization (WIPO)Copyright Treaty (WCT) and the WIPO Performances and Phonograms Treaty(WPPT) was the recognition of an exclusive right to ‘make available’protected works or objects of related rights in an interactive context. Thedrafters achieved this through the adoption of an exclusive ‘communication tothe public’ right, including an exclusive ‘making available’ right in Article 8of the WCT,5 and an exclusive ‘making available’ right in Articles 10 and 14of the WPPT (as to performers and producers of phonograms, respectively).6

Simply put, these rights ensure that authors of copyright works and relatedrights holders can authorise or prohibit transmissions of their creative prod-ucts, whether they be transmissions over the Internet, including transmissionsover P2P networks, or (increasingly) over mobile devices.

More specifically, the drafters recognized that right holders must have thefollowing exclusive right:

Legal issues in peer-to-peer file sharing 45

5 WIPO Copyright Treaty, S. Treaty Doc. No. 105-17 (1997); 36 ILM 65 (1997)(entry into force March 6, 2002), at http://www.wipo.int/treaties/en/ip/wct/pdf/trtdocs_wo033.pdf (WCT), Art. 8 (‘Right of Communication to the Public’).

6 WIPO Performances and Phonograms Treaty, S. Treaty Doc. No. 105-17, 36ILM 76 (1997) (entry into force May 20, 2002), at http://www.wipo.int/clea/docs_new/pdf/en/wo/wo034en.pdf (WPPT), Arts. 10 (‘Right of Making Available ofFixed Performances’) and 14 (‘Right of Making Available of Phonograms’).

making available to the public of their works [performances/ phonograms] in sucha way that members of the public may access these works [performances/phono-grams] from a place and at a time individually chosen by them.7

The adoption of such rights in the WCT and WPPT importantly sought to closegaps in coverage in the existing conventions and treaties (either as to certainacts or as to certain subject matter), as no right in the existing treatiesadequately or completely dealt with the transmission of works and objects ofrelated rights through the Internet or other similar digital interactive networks.Two essential theories for the type of new exclusive right to be grantedemerged at the 1996 Diplomatic Conference: one seeking to fit digital andinteractive transmissions within existing notions of distribution, and anotherseeking to fit such transmissions within existing notions of communication tothe public. Neither a ‘distribution’ model nor a ‘communication’ modelseemed entirely satisfying (or acceptable) to the delegates at the 1996Diplomatic Conference because of the nature of digital transmissions; forexample, the transmission from one computer to another does not result in thetransfer of property or possession (because the ‘source’ copy remains in thepossession of the sender), but by the same token, such a transmission does notresemble a traditional non-demand broadcast (because of the interactive natureof making available).

What emerged was a flexible approach owing to the differences in nationallegislations and approaches at the time, an approach Dr. Mihály Ficsor hasdubbed the ‘umbrella solution’. As long as the act of making works, soundrecordings and performances available interactively is covered by one or moreexclusive rights, national legislatures could have considerable flexibility inlabeling or characterizing the exclusive rights involved.8 Thus, while the WCTand WPPT do not require that the so-called ‘distribution’ right extend beyondthe distribution of tangible copies, the umbrella solution does permit signato-ries to implement the ‘communication to the public’/ ‘making available’ rightby applying the exclusive distribution right in a country’s law to electronictransmissions of works, sound recordings, and performances fixed in soundrecordings. Most countries, however, have opted for adapting other existingrights, most commonly the ‘communication to the public’ right, to ensure thatinteractive transmissions are covered. As to related rights, most countries have


7 WCT Art. 8; WPPT Arts. 10 and 14.8 The ‘making available’ right is characterized in what Dr. Ficsor calls a

‘neutral, legal-characterization-free description of interactive transmissions . . . [that is]included in Article 8 [of the WCT] in the following way: making available to the publicof . . . works in such a way that members of the public may access these works from aplace and at a time individually chosen by them.’ Mihály Ficsor (2002), The Law ofCopyright and the Internet (Oxford University Press) at C8.06.

added a standalone ‘making available’ right or have subsumed the interactiveright within a concept of ‘communication’ or sometimes ‘broadcast’.

In any case, what is clear about this interactive right is that a work (orphonogram/performance in the case of the WPPT) can be made available toothers in a manner such that they may access it from a time and place chosenby them, and nothing more. The onward distribution or communication maybe shown (for example, to discern damages), but need not be because, owingto its interactive quality, the act of making available a work only consists of‘making the work accessible to the public … in which case, the members ofthe public still have to cause the system to make it actually available to them’.9

In other words, it should not depend on the public to cause the system tofurther communicate the work for the right to be invoked, as long as the workhas been made available in such a way as it is capable of being accessed. Mostof the jurisprudence recognizes this essential element of the right of makingavailable.10

US and EU Implementation Compared

The US concluded that a ‘distribution’ approach more closely approximatesthe real market impact of on-demand, and other online transactions, in whichthe recipient of the transmission often ends up with a copy of a work that heor she did not have before. Thus, it relied upon the distribution right to coverdistributions/transmissions beyond physical distribution of tangible copies.11

When deciding whether US law needed to be amended to implement the‘making available’ right, the drafters (and those advising them) determined itneed not because ‘making available’ as defined in the WCT (and WPPT) wasadequately covered by the broad reading of the distribution right in conjunc-tion with the reproduction right (which would protect against someone makingan illegal copy when uploading it to a server or when an end-user downloadsit), and other rights under US law.12


9 World Intellectual Property Organization, Guide to the Copyright and RelatedRights Treaties Administered by WIPO and Glossary of Copyright and Related RightsTerms, WIPO Pub. No. 891(E) (2003), CT-8.6, at 208.

10 For example, in the United States, the Supreme Court held in New York TimesCo. v Tasini, 533 US 483, 488 (2001), that notwithstanding absence of proof that indi-vidual copies of plaintiffs’ articles on defendant’s database were transferred to users ofthe database, ‘it is clear’ that the defendants ‘distribute copies’ of the plaintiffs’ articlesmerely by making them available for download. Id. at 498, 505. The Court rejected thedefence that there was no distribution under US law by the defendants since it was thedatabase subscribers who were responsible for the downloading.

11 See, e.g., Playboy Enterprises, Inc. v Frena, 839 F. Supp. 1552 (M.D. Fla. 1993).12 The Register of Copyright and the United States Congress concluded that

Unlike the US, the EU opted for a ‘communication to the public’.13 At thetime these standards were adopted, there was little question that making avail-able works (including objects of related rights) in such a way that anyone canaccess them at their own time and place, including P2P uploads or downloads,would be covered. It would have been absurd, for example, for the UnitedStates to leave a gap in coverage for any acts of ‘making available’ as definedunder the WCT and WPPT because at that very moment it was amending its


§ 106(3) covered the ‘making available’ right, such that no amendment to the USCopyright Act was necessary. Letter from Marybeth Peters to Rep. Howard L. Berman(25 September 2002), reprinted in Piracy of Intellectual Property on Peer-to-PeerNetworks: Hearing Before the Subcomm. on Courts, the Internet, and IntellectualProperty of the House Comm. on the Judiciary, 107th Cong. 2nd Sess. 114–15 (2002)(‘[M]aking [a work] available for other users of a peer to peer network to download . .. constitutes an infringement of the exclusive distribution right, as well of the repro-duction right.’) (‘As you are aware, in implementing the new WIPO Copyright Treaty(WCT) and WIPO Performances and Phonograms Treaty (WPPT) in the DigitalMillennium Copyright Act, Congress determined that it was not necessary to add anyadditional rights to Section 106 of the Copyright Act in order to implement the “makingavailable” right under Article 8 of the WCT.’).

13 See Council Directive 2001/29/EC of 22 May 2001 On the Harmonisation ofCertain Aspects of Copyright and Related Rights in the Information Society, 2001 O.J.(L 167/10), Art. 3. See also Mihály Ficsor, The Right of Communication to the Publicand the Making Available Right (on file with author). Article 3(1) of the ‘Directive2001/29/EC of the European Parliament and of the Council of May 22, 2001, on theharmonisation of certain aspects of copyright and related rights in the informationsociety’, in a way, is only a slightly adapted version of Article 8 of the WCT as it readsas follows: ‘Member States shall provide authors with the exclusive right to authoriseor prohibit any communication to the public of their works, by wire or wireless means,including the making available to the public of their works in such a way thatmembers of the public may access them from a place and at a time individually chosenby them.’ The recitals concerning this provision clarify that it includes two elements.Recital (23) refers to the need for harmonizing the provisions on communication tothe public in general: ‘This Directive should harmonise further the author’s right ofcommunication to the public. This right should be understood in a broad sense cover-ing all communication to the public not present at the place where the communicationoriginates. This right should cover any such transmission or retransmission of a workto the public by wire or wireless means, including broadcasting. This right should notcover any other acts.’ Recital (25) addresses the issue of on-demand transmissions inrespect of copyright: ‘The legal uncertainty regarding the nature and the level ofprotection of acts of on-demand transmission of copyright works and subject-matterprotected by related rights over networks should be overcome by providing forharmonised protection at [the] Community level. It should be made clear that allrightholders recognised by this Directive should have an exclusive right to makeavailable to the public copyright works or any other subject matter by way of interac-tive on-demand transmissions. Such interactive on-demand transmissions are charac-terised by the fact that members of the public may access them from a place and at atime individually chosen by them.’

law to implement the two treaties and was in the process of negotiating FreeTrade Agreements (for example with Singapore) that expressly included therequirement to provide authors and right holders with an exclusive right tomake available works (and objects of related rights).

Global Implementation of Article 8 of the WCT and Articles 10, 14, and15 of the WPPT

Globally, the number of implementations has grown markedly in the pastseveral years, whether they be by changes to domestic legislation (or proposedchanges), by commitments through bilateral agreements (most notablythrough Free Trade Agreements entered into between several countries and theUnited States), by interpretation, and by self-implementation (that is, throughaccession to the treaties as ‘superior’ law). As of April 2008, at least 96 coun-tries/territories have, committed to have, or are in the process of legislating toadd, interactive rights of ‘communication to the public’/‘making available’ orprovide such rights by interpretation. Of those 96 countries/territories, 77provide WPPT-compatible ‘making available’ rights for producers of soundrecordings and/or performers, or had draft legislation providing such rights.14

There are several others that have broad interpretations consistent with thetreaties or that implement the treaties provisions through self-execution (forexample, Ghana, Guinea).

Anecdotal Implementation Data (keying on Asia)

Anecdotally, there seem to be four different implementation scenarios:

• Countries that provide fully or near fully treaties-compatible rights as toworks and objects of related rights (examples are Australia and in Asiainclude Brunei Darussalam, Cambodia, Hong Kong,15 Japan, Malaysia,Papua New Guinea, Singapore, and Taiwan).16


14 Draft legislation: Oman (legislation awaits signature by the Sultan),Swaziland, the Philippines, Thailand, Macedonia (Former Yugoslav Republic of), andKuwait have draft legislation that, if enacted, would provide an interactive ‘makingavailable’ to the public right. India’s 2006 HRD draft would provide such a right. FTAs:Panama (once FTA goes into force) and Colombia (if approved) would be obligated toprovide ‘making available’ rights as to works and objects of related rights.

15 Hong Kong begins with the concept of distribution (similar to the US) but alsoincludes express language that largely mirrors the treaties. Copyright OrdinanceSection 26 (Cap 528) (2001). Section 26 of the Ordinance provides as to works (includ-ing sound recordings):

• Countries that provide WCT-compatible rights but not WPPT-compati-ble rights, or vice versa (only Nepal from Asia falls into this latter cate-gory), or for which implementation of either is problematic or inquestion in some way (examples in Asia are Indonesia, the Philippines,Republic of Korea, Samoa, Sri Lanka, and Vietnam).

• Countries that provide broad exclusive rights for works and/or objectsof related rights (for example, ‘communication to the public’ and‘broadcast’ rights) but no express interactive ‘making available’ right(examples are New Zealand and in Asia include Bangladesh, Bhutan,Fiji, Mongolia, Pakistan, and Thailand).

• Countries that provide no comparable rights to those in Article 8 of theWCT and Articles 10/14/15 of the WPPT (examples in Asia includeLaos and Myanmar).

Implementation of Related Rights under the WPPT: IncompleteSolutions for the ‘Making Available’ Right

One problematic aspect in implementing the ‘communication to thepublic’/‘making available’ right in the new digital environment is the treat-ment of related rights. Some countries have incompletely or improperlydefined the scope of the right, marring their implementation of the WPPT withrespect to related rights.17 Other countries have simply failed to implement the


(1) The making available of copies of the work to the public is an act restricted bycopyright in every description of copyright work.(2) References in this Part to the making available of copies of a work to the publicare to the making available of copies of the work, by wire or wireless means, in sucha way that members of the public in Hong Kong or elsewhere may access the workfrom a place and at a time individually chosen by them (such as the making avail-able of copies of works through the service commonly known as the Internet).(3) References in this Part to the making available of copies of a work to the publicinclude the making available of the original.(4) The mere provision of physical facilities for enabling the making available ofcopies of works to the public does not of itself constitute an act of making availableof copies of works to the public. The provision for performers is essentially thesame.16 Taiwan has taken the approach of creating a new ‘public transmission’ right

to satisfy the WIPO treaties. Taiwan Copyright Law, Art. 3(10). Taiwan’s approachappears to adopt the broad ‘communication to the public’ approach, but given the vari-ous exclusive rights in Taiwan’s draft law that together provide treaties-compatiblecoverage, it can be said that Taiwan’s approach may be closest to Dr. Ficsor’s ‘umbrellasolution’, and may be an indicator that the notion of an ‘umbrella solution’ remainsviable.

17 For example, some African countries that have implemented provide broadexclusivity for communications to the public (including ‘making available’) for works

WPPT at all.18 For example, while Indonesia’s prompt ratification of the WCT(the first country in the world to ratify the WCT, on 5 June 1997) set an excel-lent example, its 2002 Copyright Law failed to implement an interactive andexclusive ‘making available’ right as to sound recording producers andperformers. Indonesia has since joined the WPPT in 2005, but is yet to draftimplementing regulations for the WPPT.

Indonesia is not alone in its failure to properly implement the WPPT. Partof some countries’ reluctance to act with respect to related rights may be areflection of the uncertain outcome at the 1996 Diplomatic Conference, specif-ically, the inability of the delegations to completely resolve all the issuesrelated to rights to be afforded to producers of phonograms and performers inthe networked (for example, Internet) environment. Specifically, the delegatesat the Conference adopted an agreed statement in connection with Article 15of the WPPT. It reads as follows:

It is understood that Article 15 does not represent a complete resolution of the levelof rights of broadcasting and communication to the public that should be enjoyedby performers and phonogram producers in the digital age. Delegations were unableto achieve consensus on differing proposals for aspects of exclusivity to be providedin certain circumstances or for rights to be provided without the possibility of reser-vations, and have therefore left the issue to future resolution.

This agreed statement reflects the discussions and negotiations about the so-called ‘near-on-demand’ forms of broadcasting and communication to thepublic by cable, such as subscription services. In respect of such services, thedemand of rights owners seems to be quite justified that, at least a right toremuneration should be granted, but in cases where such services most seri-ously conflict with a normal exploitation of the rights in phonograms, anexclusive right should be considered.19 What is clear is that the ‘making avail-


but provide an incomplete approach to related rights, affording exclusivity only withregard to ‘making available’ for producers of sound recordings and performers, andcreating a right to a single remuneration for ‘other’ communications to the public andbroadcasts. See, e.g., Botswana, Copyright and Neighbouring Rights Act (2000) (A.19), § 26(1); Tanzania, The Copyright and Neighbouring Rights Act, No. 6 (1999), §33; Burkina Faso, Law No. 032-99/AN Law for the Protection of Literary and ArtisticProperty (1999), § 79.

18 While beyond the scope of this chapter, another area in which implementationstrategies differ, but in which mistakes can be very costly to the system and leave coun-tries out of compliance, is in the area of exceptions and limitations on the rights grantedin the WCT and WPPT with respect to communications to the public and the ‘makingavailable’ of works or objects of related rights.

19 An example of existing legislation trying to respond to such a demand may befound in §§ 106(6), 114(a) and 114(d) to (j) of the US Copyright Act.

able’ right in Article 14 is to be considered a starting point for countries’ imple-mentation approaches, not an end point. It would be unfortunate to stifle newways of distributing copyright materials in these countries, including subscrip-tion services, interactive or on-demand services, or near-on-demand services, byenacting only a making available right as to phonograms, without consideringlevels of exclusivity that ought to be granted to right holders in such cases.20

RECENT P2P CASES WITH A FOCUS ON ‘MAKINGAVAILABLE’

Over the past several years, there has been steady growth in the number ofcases and the number of jurisdictions in which courts have been asked to grap-ple with infringement issues involving the ‘communication to the public’ and‘making available’ of works and other objects of protection, including overP2P networks.

The following sections are a brief but non-exhaustive survey (in alphabeti-cal order) of the variety of recent cases and trends in several jurisdictions.

Australia

In Universal Music Australia Pty Ltd v Sharman License Holdings Ltd,21 theFederal Court of Australia (Judge Wilcox) held several defendants associatedwith Sharman Networks liable for ‘authoris[ing] … making a copy [and]communicating … to the public’ various sound recordings using the Kazaapeer-to-peer file-sharing network, all arising out of the distribution of theKazaa P2P file-sharing software to end-users.22 The Statement of Claim


20 Express rights for record producers and performers in the online environ-ment (as for other right holders) can provide economic rationales for investment inthe creation of recorded music (and other subject matter). In an environment increas-ingly dominated by digital transmissions rather than product delivery, and by anincreasing variety of methods of distribution, it is important to address the level ofexclusivity to be afforded over interactive transmissions of recordings and perfor-mances – uses that are fast becoming the central economic uses of recordings andperformances.

21 Universal Music Australia Pty Ltd v Sharman License Holdings Ltd [2005]FCA 1242 (5 September 2005).

22 The court noted three factors supporting a finding of secondary (authoriza-tion) liability: (1) defendants’ knowledge that the system was being ‘widely used forthe sharing of copyright files’; (2) failure to take ‘any action to implement’ … ‘techni-cal measures (keyword filtering and gold file flood filtering) that would enable therespondents to curtail – although probably not totally to prevent – the sharing of copy-

specifically included references to ‘making available’, the actionable claimbeing that of ‘authorising’ the making available as follows: ‘authorising Kazaausers to make available online, or electronically transmit, to the public MP3 orother digital music files constituting copies of the whole or a substantial partof the relevant sound recordings.’ In describing the infringing activity of thedefendants, the court noted, ‘[t]here is no evidence as to the identity of theparticular Kazaa user or users who made available for sharing, or downloadedfrom another user, each of the Defined Recordings. However, somebody musthave done so. Witnesses for the applicants gave uncontested evidence of beingable to download each of these sound recordings as blue files’ (para. 415)[emphasis added].

In Cooper v Universal Music Australia Pty Ltd,23 the Federal Court of


right files’; and (3) encouraging infringement, for example, by including ‘on the Kazaawebsite exhortations to users to increase their file sharing and a webpage headed “Jointhe Revolution” that criticises record companies for opposing peer-to-peer file shar-ing.’ The remedy included defendants being ‘restrained, by themselves, their servantsor agents, from authorising Kazaa users to do in Australia any of the infringing acts, inrelation to any sound recording of which any of the applicants is the copyright owner,without the licence of the relevant copyright owner.’ However, the court was willing toallow the continuation of the service if the new versions of the software impose filter-ing (non-optional key-word filter technology). More specifically, the defendants weregiven a choice to continue operating the website if one of the two situations could beconfirmed:

(i) that(a) the software program received by all new users of the Kazaa file-sharing

system contains non-optional key-word filter technology that excludes from thedisplayed blue file search results all works identified (by titles, composers’ or perform-ers’ names or otherwise) in such lists of their copyright works as may be provided, andperiodically updated, by any of the applicants; and

(b) all future versions of the Kazaa file-sharing system contain the said non-optional key-word filter technology; and

(c) maximum pressure is placed on existing users, by the use of dialogue boxeson the Kazaa website, to upgrade their existing Kazaa software program to a newversion of the program containing the said non-optional key-word filter technology; or

(ii) that the TopSearch component of the Kazaa system will provide, in answer to arequest for a work identified in any such list, search results that are limited to licensedworks and warnings against copyright infringement and that will exclude provision ofa copy of any such identified work.NOTE: On 5 December 2005, the Federal Court of Australia ceased downloads ofKazaa in Australia after Sharman Networks failed to modify their software by theDecember 5 deadline. Users with an Australian IP address were greeted with themessage ‘Important Notice: The download of the Kazaa Media Desktop by users inAustralia is not permitted’ when visiting the Kazaa website. Sharman planned to appealthe Australian decision, but ultimately settled the case as part of its global settlementwith the record labels and studios in the United States.

23 Cooper v Universal Music Australia Pty Ltd, FCAFC 187 (18 December 2006).

Australia found the proprietor of a website MP3s4free.net (Cooper), thewebsite host (the ISP),24 and a director liable for authorising infringement byknowingly allowing others to place on his website hyperlinks to infringingmaterial and encouraging website users to access infringing files via the links.Regarding the making available right, the court found that ‘[a] recording iscommunicated within the meaning of § 85(1)(c) if it is made available onlineor electronically transmitted (§ 10).’25 In this case, the website in questionprovided ‘deep links’ to infringing files located at remote third parties’ IPaddresses. Because of this, the court characterized the activity as providing‘ready access’ to the files, but nonetheless stopped short of concluding that thedefendants themselves had ‘communicated’ the files.26 Rather, it was the thirdparties who had communicated (by uploading and making the files availablefor download). In order to find the defendants’ liable, the court looked to theCopyright Act and found that the defendants were liable for ‘authorising’ [§110] infringement taking place between third parties.27 In the lower court deci-sion, Judge Tamberlin noted that ‘communicate’ under the Australian lawpoints to ‘both limbs of the definition of communicate, namely, to make avail-able on-line and to electronically transmit the subject matter.’28


24 The Court also rejected the possibility that the Australia-US Free TradeAgreement safe harbour scheme could apply to the ISP, holding that the amendmentsdo not apply retrospectively, and that even if they did, the ISP would not have been ableto rely on the safe harbour provisions because it received a financial benefit from theinfringements (in the form of free advertising on the website) and failed to take actionagainst the owner of the site despite having knowledge of the infringements.

25 In the lower court decision, Judge Tamberlin discussed the meaning of ‘makeavailable online’ citing the Australia law, which almost exactly mirrors the WCT defi-nition.

26 Another argument, that Cooper had infringed copyright by ‘exposing for saleor by way of trade’ infringing music files on his website, was also rejected.

27 One interesting and perhaps important note as to international copyright lawprinciples involves the posture of the Australian court in Cooper as to extraterritorialacts of infringement, that is, infringing acts outside of Australia but linked to onCooper’s website. Section 101(1) of the Australian law provides that ‘copyright isinfringed by a person who, not being the owner of the copyright and without the licenceof the copyright owner, authorises another person to do in Australia an infringing act.’At least in the Cooper case, the location of the third parties either ‘making available’or ‘electronically transmitting’ the works or sound recordings is not made clear, andthere seems to be some question open as to whether the mere authorization in Australiaof acts occurring outside Australia can constitute infringement of s. 101(1). Contrastthis possibility with the clear holding in the US case of Subafilms, Ltd. v MGM-PatheCommunications Co., 24 F.3d 1088 (9th Cir.) (en banc), cert. denied, 513 US1001 (1994), in which the US court held that the mere authorization of an infringingact occurring outside the United States is not actionable in the US.

28 Judge Tamberlin also held that the remote websites had infringed as they had‘made available … the recordings,’ not the one providing the deep link.

Canada

In BMG Canada Inc. v John Doe (F.C.),29 the Federal Court of Canada deniedissuing a court order to turn over records of P2P file sharers partly on theground that the plaintiffs (record companies) had failed to make out a primafacie case of copyright infringement. Plaintiffs alleged that defendantsinstalled a peer-to-peer application on their computers, copied files to ‘shareddirectories’, used ISP services to connect their computers to the Internet, ranthe peer-to-peer application while on the Internet, and made files in the shareddirectories available for copying, transmission and distribution to millions ofusers of the peer-to-peer service. Specifically regarding the ‘making available’right, the court held that there was ‘no evidence that the alleged infringerseither distributed or authorized the reproduction of sound recordings … [a]llthey did was place personal copies into shared directories accessible by othercomputer users.’ The Federal Court cited the judgement of the Supreme Courtof Canada in CCH Canadian Ltd. v Law Society of Upper Canada30 for theproposition that ‘the provision of facilities that allow copying does not amountto authorizing infringement.’ Interestingly, the court focuses on the missing‘authorisation’ from which liability could have been found, noting, ‘[h]ow iswhat was done here different from a library placing a photocopier in a room


29 BMG Canada Inc. v John Doe (F.C.), 2004 FC 488 (CanLII).30 CCH Canadian Ltd. v Law Society of Upper Canada, [2004] 1 S.C.R. 339,

2004 SCC 13. In CCH¸ plaintiffs sued the Law Society over its Great Library atOsgoode Hall in Toronto, a reference and research library with one of the largest collec-tions of legal materials in Canada. The Great Library provided a request-based photo-copy service for Law Society members, the judiciary and other authorized researchers.Under this ‘custom photocopy service,’ legal materials were reproduced by GreatLibrary staff and delivered in person, by mail or by facsimile transmission torequesters. The Law Society also maintained self-service photocopiers in the GreatLibrary for use by its patrons. CCH specifically attacked the provision of a photocopymachine for ‘self-service’ photocopying of copyright materials. The Supreme Court ofCanada, in its holding, defined the contours of secondary liability, noting, ‘[w]hileauthorization can be inferred from acts that are less than direct and positive, a persondoes not authorize infringement by authorizing the mere use of equipment that couldbe used to infringe copyright.’ More specifically, the court held that a library ‘does notauthorize copyright infringement by maintaining a photocopier … and posting a noticewarning that it will not be responsible for any copies made in infringement of copy-right.’ (The court also noted that ‘[c]ourts should presume that a person who authorizesan activity does so only so far as it is in accordance with the law,’ and that ‘[t]hispresumption may be rebutted if it is shown that a certain relationship or degree ofcontrol existed between the alleged authorizer and the persons who committed the copy-right infringement,’ but noting that in this case, there was no evidence that the Societyexhibited ‘sufficient control’ over the library patrons to conclude that the Society ‘sanc-tioned, approved or countenanced the infringement’).

full of copyrighted material? In either case the element of authorization ismissing.’ The court noted that the WIPO Treaties had not been implementedin Canada, and that an unlawful ‘distribution’ would not be found ‘absent apositive act by the owner of the shared directory, such as sending copies oradvertising the material’s availability for copying’.

Hong Kong

The Hong Kong ‘BitTorrent’ case is also instructive as to how courts are deal-ing with the P2P phenomenon as well as the ‘making available’ issue.31 On 18May 2007, the Hong Kong Court of Final Appeal affirmed the conviction ofChan Nai-Ming for ‘attempted distribution’32 of illegal copies of copyrightedworks. In this case, Mr Chan was accused of having ‘seeded’ copyright filesto be shared using the ‘BitTorrent’ file sharing protocol – a P2P file sharingsystem by which small pieces of files are shared among a group (a ‘swarm’),which can distribute files more quickly and efficiently the more people join the‘swarm.’ One of the key points of discussion (both at the trial court level andon appeal) regarding the ‘making available’ right was whether there was anydistribution, or any possibility of a distribution, as all Mr Chan allegedly didwas ‘seed’ the files so that they could be downloaded using the BitTorrentmethod of file sharing.33 The Court had no trouble holding that uploading filesthrough the ‘seeding’ process and making them available for others to down-load constitutes ‘distribution’ under the Hong Kong SAR CopyrightOrdinance.34 Specifically, Mr Justice Rubeiro PJ said the following:

Distribution in its ordinary meaning, is clearly capable of encompassing a processin which the distributor first takes necessary steps to make the item available andthe recipient then takes steps of his own to obtain it. A simple example involvesdistribution of soft drinks or other consumer items by means of coin-operated vend-ing machines.


31 HKSAR v Chan Nai-Ming, FACC 0003/2007, 18 May 2007.32 Hong Kong prosecutors had initially indicted Mr Chan on a count of unlaw-

ful ‘distribution’ but amended the count to ‘attempted distribution’ to dispense withadditional evidentiary burdens.

33 Indeed, Chan’s defence was that ‘seeding’ the files on Torrent was not ‘distri-bution’ under s. 118 of the Hong Kong Copyright Ordinance, but rather, a way sharingthe files.

34 One of the key defence points was that, while the statute provided for civilremedies for ‘making available’ as defined in s. 26 of the Ordinance, for criminal liabil-ity to attach, the prosecutor needed to show ‘distribution’, which is nowhere defined inthe Ordinance (and is not therefore defined to subsume the concept of ‘making avail-able’).

Japan

In what is known as the ‘File Rogue’ case, JASRAC (Japanese Society forRights of Authors, Composers and Publishers) v MMO Japan Ltd.,35 theTokyo District Court found MMO Japan Ltd. and its representative MichihitoMatsuda, who administered the peer-to-peer file-sharing service called ‘FileRogue,’ liable for copyright infringement of the rights of ‘making copyrightedworks transmittable’ and ‘public transmission of copyrighted works’.36 One ofthe issues the court considered was whether a sender who stores an MP3 filein a share folder on his or her PC and connects to the defendant’s serverinfringes the plaintiff’s right of ‘making copyrighted works transmittable’.The court held that ‘the defendant’s service provides its users with an oppor-tunity to exchange MP3 files, which are reproductions of commercially avail-able recordings (CDs)’ [emphasis added]. More specifically, the court said, ‘asfar as the exchange of MP3 files is concerned, the defendant’s service, ineffect, enables its users to freely send and receive MP3 files.’ [emphasisadded].37

Korea

Korea’s seminal P2P cases involve the various iterations of the Soribada P2P


35 JASRAC v MMO Japan (Tokyo District Court, 29 January 2003), H17.3.31,Tokyo Dist. Ct. No. 16 Ne 446 http://www.jasrac.or.jp/ejhp/release/2003/0129.html(English-language summary) (awarding preliminary injunction against distribution ofFileRogue file-sharing program).

36 The case was continued to determine the scope of the injunction and theamount of damages to be paid. In a provisional injunction applied by JASRAC in 2002,the Tokyo District Court ordered MMO Japan not to allow the transmission of musicalworks administered by JASRAC.

37 Another P2P case in Japan worthy of note involved the file-sharing servicecalled ‘Winny’. The Winny software was developed by Mr Isamu Kaneko to allow foranonymous peer-to-peer file sharing. The anonymous system was styled after anotherprogram called ‘Freenet’ which purported to protect user identities to promote freedomof speech, but Winny was advertised on an Internet bulletin board well known for prop-agating copyright infringement on the Internet. The bulletin board, 2channel, has beencited in numerous press reports as a haven for copyright infringing activities. On 27November 2003, police raided the home of Kaneko, known to ‘Winny’ users as ‘Mr47’, and shut down his Internet home page. On the same day, in separate raids, policearrested two men for illegally distributing the Universal Studios film ‘A BeautifulMind’ and for illegally distributing game software via ‘Winny.’ On 13 December 2006,the Kyoto District Court found Kaneko guilty of aiding and abetting the infringementof Japan’s Copyright Law. See Motion Picture Association, Japanese File-SharingSystem Developer Guilty Of Abetting Copyright Infringement, 13 December 2006(Press Rel.).

service and are instructive as to how ‘communication to the public’ rights and‘making available’ rights have become vital for right holders in practice. In thecase involving Soribada 3,38 an injunction was issued in 2005, among otherrelief, ordering the founders of the Soribada P2P system to cease allowingusers of Soribada 3 to upload or download illegal MP3 files of the right hold-ers. The key relevant issue in the case was whether the ‘transmission’ right isinfringed by merely making available unauthorized copies of files in a sharedfolder. The court found that ‘making an MP3 file available for downloading byother users after storing it on a shared folder requires only interfacing to thenetwork receiving IP addresses, etc. … thus, no separate transmission is neces-sary’.39 In a key legal holding regarding the making available right, the courtfound that ‘providing copyright material for use through wire communicationfor receipt or use by other users who interface to the network of the Soribadaserver anytime, anywhere … [falls] under the infringement of the transmissionright under s. 1, Article 91 of the Copyright Act.’40 Another key holding wasas follows:

MP3 files … saved to their own download folders or those … stored themselves inthe download folder shall be [deemed] stored in the shared folder … for immediatedownloading by other Soribada users. This is tantamount to providing copyrightmaterial for use through wire communication for receipt or use by other users whointerface to the network of the Soribada Service anytime, anywhere; thus fallingunder the infringement of the transmission right of the Petitioner.

The founders of Soribada have since settled with many right holders andlaunched Soribada 5 in July 2006 as a purportedly legitimate service charginga monthly fee (currently 4,000 Won, or almost US$4), utilizing audio finger-print technology to identify tracks and technology to filter out unlicensed


38 See Korean Association of Phonographic Producers v Soribada Co., Ltd.,Case No. 2001 Kahab 3491, Seoul Cent. Dist. Ct., 50th Civ Div., 29 August 2005(Soribada 3). The Soribada services (Soribada 1–5) have changed over time, eachbecoming less centralized than the one before it. In Soribada 1, the defendants werefound contributorily liable for the infringements of their third party customers; theservice they provided was a website in which thousands of songs were indexed andhyperlinked to IP addresses at which the various files could be downloaded. SeeKorean Association of Phonographic Producers v Soribada Co., Ltd., Case No. 2002Kahab 77, Suwon Dist. Ct., 9 July 2002, aff’d Seongwan [sp] Branch Ct. (14 February2003), aff’d in part, Seoul High Court (12 June 2005), Case No. 2003 11a2 1140(Soribada 1). In Soribada 2, the defendants removed the hyperlinks to the IP addresses,but still retained an index on the site (resembling the architecture and business modelwhich was struck down as illegal in the US Napster litigation).

39 Soribada 3, at § 1(a)(2)(a).40 Id. at § 2(b)(2)(b).

tracks.41 In June 2007, the Korean government enacted amendments to theCopyright Act of Korea, including mandating filtering for any ‘special type ofonline service providers,’42 defined to include services like Soribada.43

People’s Republic of China

The making available right (codified in Article 10(12) and 41 as to soundrecordings of the Copyright Law of the People’s Republic of China (2001))has not been prominent in the seminal Internet infringement cases in China.Nonetheless, the cases are worthy of note as they may be said to set the stagefor how judges will deal with such cases in the future. In January 2007, theInternational Federation of Phonographic Industries (IFPI) filed 11 separateclaims for an injunction and damages against the Chinese Internet searchengine Yahoo! China, on behalf of local and international record companies,after the search engine walked away from talks regarding its making availableof copyrighted songs for download without permission from record compa-nies. Specifically, Yahoo! China, through its MP3 search page, offers a musicdelivery service that induces and facilitates users to search for individual MP3music tracks, and then download and/or play them for free without ever leav-ing the website. On 24 April 2007, Beijing’s No. 2 Intermediate Court ruledthat the search engine was responsible for the copyright violations because itenabled web surfers to find the illegal music.44 Similar to Cooper, the court


41 As of January 2008, Soribada was reportedly the second largest music serviceprovider in Korea with 700,000 paying subscribers. See Soribada, athttp://en.wikipedia.org/wiki/Soribada. Soribada claims to have licensing deals withalmost all local labels, with the exception of Seoul Records, which is owned by SKTelecom, Soribada’s main rival in the online space. Among foreign labels, Soribadasays it has a deal with Universal Music and that it is about to close deals with SonyBMG, EMI and Warner Music. See Mark Russell, Soribada Gets OK For Legal P2PService, 13 March 2008, at http://www.billboard.biz/bbbiz/content_display/industry/e3i276690244f41c8186be5e51e3a031b19.

42 The new Section 104(1) provides specifically,‘An online service provider whose service involves peer-to-peer use betweendifferent people’s computers, for which the main purpose is the transmission ofworks (hereinafter referred to as “a special type of online service providers”), shall,at the request of relevant right holders, be required to take technical measures,including those to block illegal transmissions. In this case, the necessary measuresto be taken at the request of relevant right holders shall be determined by the detailsof a Presidential Decree.’43 Ministry of Culture and Tourism Public Notification No. 2007-24.44 See Statement from John Kennedy, Chairman and Chief Executive of IFPI, on

today’s Yahoo! China ruling, 24 April 2007, at http://www.ifpi.org/content/section_news/20070424a.html.

had no problem finding Yahoo! China liable for linking to illegal downloadsof copyrighted music,45 and the company was ordered to pay a fine of 200,000Yuan and remove the links. On 20 December 2007, the Beijing High Courtupheld the lower court’s decision.46 Yahoo! China failed to comply and facedlegal action again in February 2008 to enforce the December court order. TheYahoo! China case was decided under the 2006 Regulations on the Protectionof the Right of Communication through Information Networks (1 July 2006)(‘2006 Internet Regulations’).

The Yahoo! China case stands in contrast with litigation brought by recordcompanies against the major Chinese search engine Baidu in 2005 under theCopyright Law – prior to the 2006 Internet Regulations. In November 2006,the Beijing Intermediate People’s Court found no liability for copyrightinfringement, holding the search engine’s deep links ‘did not constitute aninfringement [by Baidu] as all the music was downloaded from web servers ofthird parties.’47 The record companies appealed but the Beijing High Courtupheld the lower court’s decision on 20 December 2007 (the same date as thedecision affirming the Intermediate Court’s decision holding Yahoo! Chinaliable). However, as the Baidu decision was based on the state of the law priorto the issuance of the 2006 Internet Regulations, on 4 February 2008, recordindustry groups filed new civil suits against Baidu and also Sohu/Sogou fortheir music deep linking services. A similar case brought by Hangzhou-head-quartered online music service 5fad was likewise unsuccessful.48


45 Mike Rosen Molina, China court rules Yahoo! China violated copyright bylinking to filesharing sites, 24 April 2007, at http://jurist.law.pitt.edu/paperchase/2007/04/china-court-rules-yahoo-china-violated.php.

46 However, the Yahoo injunction only extended to a few songs and the result-ing damages were extremely low. Chinese officials responsible for drafting theRegulations on the Protection of the Right of Communication through InformationNetworks (‘Internet Regulations’) that became effective on 1 July 2006 have stated thatunder Article 23 of those regulations, ISPs are liable for deep linking.

47 See Baidu off the hook in copyright infringement case, 20 November 2006, athttp://digitalmusic.weblogsinc.com/ 2006/11/20/baidu-off-the-hook-in-copyright-infringement-case/.

48 See Gareth Powell, 5fad loses copyright case against Baidu, China EconomicReview, 13 January 2007, at http://www.chinaeconomicreview.com/it/2007/01/13/5fad-loses-copyright-case- against-baidu/. More deeplinking and Internet-basedinfringement cases are sure to follow. For example, on 3 February 2008, Xunlei, one ofChina’s largest download service providers, lost a piracy suit and was ordered to pay150,000 Yuan (US$20,833) compensation to Shanghai Youdu Broadband TechnologyCo. (Youdu), according to the Pudong District People’s Court. Youdu, a contentprovider for broadband users, paid 600,000 Yuan to get rights to ‘Confession of Pain,’a blockbuster film starring Tony Leung and Takeshi Kaneshiro, from the copyrightowner on 28 December 2006, six days after it debuted. Youdu was allowed to provide

Taiwan

As with China, the seminal cases in Taiwan involve P2P file-sharing programsaiding and abetting users to download illegally, but the courts in these casesdid not directly address the ‘making available’ right. On 9 September 2005, theTaipei District Court convicted three executives of Kuro, Taiwan’s largest file-sharing service, for criminal copyright infringement.49 The court spokesmanindicated, ‘Kuro had violated copyright law in offering its members programsto download MP3 music.’ The service was run as a commercial subscriptionbusiness, with an estimated 500,000 registered users in Taiwan and mainlandChina, causing enormous losses to the music industry in both places.50 Thecourt found that Kuro ran advertisements that had encouraged members, who


a download service one month after the film’s debut, according to the agreement.Youdu planned to charge 2 Yuan a download. However, a download link for the filmappeared on Xunlei’s website (www.xunlei.com) in early January 2007. By 4 January2007, the film had been downloaded 520,869 times. In defense at court, Xunlei’s attor-ney claimed his client provided only a third-party link for the film and did not violateYoudu’s rights. The court said Xunlei objectively participated and helped the third-party website to disseminate the pirated film and promoted the film on its website.There are reportedly seven or more ‘MP3 search engines’ that offer ‘deep links’ tothousands of infringing song files and derive advertising revenue from doing so(accounting for the majority of online piracy in China) and over a dozen Chinese-basedP2P services engaging in file sharing activities, including Muper, Kugoo, Xunlei andeMule.

49 Sentences ranged from two to three years in jail and fines for criminal copy-right infringement. In addition, one of Kuro’s 500,000 paying members was sentencedto four months imprisonment for making 900 songs available for upload.

50 In a subsequent development, the Taiwan International Federation of thePhonographic Industry and Kuro reached a settlement on 14 September 2006, wherebyKuro agreed to discontinue its file-sharing function by 15 October 2006, and wouldcease distribution of P2P software, as well as pay NT$300 million (approx. US$9million) in damages to record businesses. Kuro has approximately five millionmembers in China and Taiwan. Without obtaining distribution rights, Kuro collected amonthly fee from its members for use of P2P software for illegal file sharing; it was thelargest website of its kind in Taiwan, and caused enormous financial damage to rightsholders. In August 2003, IFPI Taiwan filed for a preliminary injunction against Kuro,prohibiting the illegal file sharing of the 105 songs owned by member rights holders;then, on 4 December of the same year, the Taipei District Prosecutors Office broughtcharges against Kuro for copyright infringement and commenced public prosecution.See, e.g., Taiwan’s Kuro in substantial settlement with recording industry, 16September 2006, at http://www.ifpi.org/content/section_news/20060914.html. TheKuro case contrasted with an earlier case in which Shihlin District Court found WeberWu, president of EzPeer, a P2P file-sharing service, not guilty of criminal copyrightinfringement. See Jessie Ho, Ezpeer found not guilty in landmark copyright verdict,Taipei Times Online, 1 July 2005, at http://www.taipeitimes.com/News/front/archives/2005/07/01/2003261705.

paid a monthly fee of NT$99, to swap copyrighted music files via its site, andtherefore held that Kuro was a party to infringement of the Copyright Law.51

United States

The Congressional drafters in the United States (and those advising them) didnot deem it necessary to amend US law (specifically, § 106(3)) to explicitlyinclude the ‘making available’ language from the WCT/WPPT, and advisorshave since confirmed the existence of a ‘making available’ right under USlaw.52

The early Internet and P2P cases did not key on the making available rightas there were either clear violations of the reproduction right (MP3.com) or,with the main targets in those cases being services (for example, Napster,Grokster), alleged facilitating infringement by third parties. As can notedbelow, ‘making available’ was presumed to be an infringement in Napster,and, in Grokster, the Supreme Court at least implied that making files avail-able constitutes distribution.

In more recent cases involving recording company suits against individualsfor illegal P2P file sharing, defence counsel – facing clear-cut cases againsttheir clients for unlawful reproductions – have waged some spirited defencesagainst the recording companies, claiming that US law does not in fact providea ‘making available’ right, at least not without proof of an onward distribution.The decisions on this claim have cut both ways.


51 See Taiwanese Criminal P2P Convictions Set the Example, 11 September2005, at http://constitutionalcode.blogspot.com/2005/09/taiwanese-criminal-p2p-convictions-set.html. The Kuro case stands in contrast with the earlier District Courtruling in a criminal action against Weber Wu, owner of the P2P site EzPeer. On 1 July2005, the Taipei District Court found EzPeer not guilty of ‘engag[ing] in reproducingor publicly distributing works of copyright holders.’ More recently, EzPeer and Kuroreportedly jointly launched a legal music site, called Kuro, in mainland China. Seehttp://www.billboard.biz/bbbiz/content_display/industry/e3i4666d48f49725610e21ab472aba9283d.

52 Register of Copyrights, Marybeth Peters, in a letter to Congressional hearingson piracy of intellectual property on peer-to-peer networks, said, ‘making [a work]available for other users of [a] peer to peer network to download ... constitutes aninfringement of the exclusive distribution right, as well as the reproduction right.’Letter from Marybeth Peters, Register of Copyrights, to Rep. Howard Berman, fromthe 28th Dist. of Cal. (25 September 2002), reprinted in Piracy of Intellectual Propertyon Peer-to-Peer Networks, Hearing Before the Subcommittee on Courts, the Internet,and Intellectual Property of the House Committee on the Judiciary, 107th Cong., 2ndSess. 114–115 (2002).

The early cases: MP3.com through Grokster

• UMG Recordings, Inc. v MP3.com, Inc., 92 F. Supp. 2d 349 (S.D.N.Y.2000): This was not a P2P case but was one of the first instances of acopyright infringement claim against an Internet service offering musicto users. The MyMP3.com service allowed users to listen to songs fromthe MP3.com website by loading their legally purchased CDs into theircomputers to be recognized by the site. MP3.com in turn uploaded(reproduced) thousands of albums/songs to its server to be accessed bysuch users. US District Judge Jed S. Rakoff said, ‘[t]he complexmarvels of cyber spatial communication may create difficult legalissues; but not in this case. Defendant’s infringement of plaintiff’s copy-rights is clear.’ In finding direct infringement, the Court held that‘although defendant seeks to portray its service as the functional equiv-alent of storing its subscribers’ CDs, in actuality defendant is re-playingfor the subscribers converted versions of the recordings it copied, with-out authorization, from plaintiffs’ copyrighted CDs.’

• A&M Records, Inc. v Napster, Inc., 239 F.3d 1004 (9th Cir. 2001): Thiswas the first major case in the United States to address the application ofthe copyright laws to P2P file sharing. The Napster file-sharing softwareallowed users to: (1) make MP3 music files stored on individual computerhard drives available for copying by other Napster users; (2) search forMP3 music files stored on other users’ computers; and (3) transfer exactcopies of the contents of other users’ MP3 files from one computer toanother via the Internet. The Ninth Circuit ruled that Napster could beheld liable for contributory infringement (assuming it had knowledge, forexample, through notification by a right holder) and/or vicariously liable(as it could control the activities of infringers using the Napster service)for infringement of ‘at least two of the copyright holders’ exclusive rights:the rights of reproduction, § 106(1); and distribution, § 106(3).’53

• MGM Studios, Inc. v Grokster, Ltd., 545 US 913 (2005): Now the semi-nal P2P case in the United States, the Supreme Court held unanimouslythat ‘one who distributes a device with the object of promoting its useto infringe copyright, as shown by clear expression or other affirmative


53 To the question of how the secondary liability standards in the US wereapplied in the case, in the Opinion affirming the Appeal from the Motion to Modify thePreliminary Injunction against Napster, Judge Beezer of the Ninth Circuit affirmed themodified preliminary injunction, obligating Napster ‘to remove any user file from thesystem’s music index if Napster has reasonable knowledge that the file contains plain-tiffs’ copyrighted works. Plaintiffs, in turn, must give Napster notice of specific infring-ing files.’

steps taken to foster infringement, is liable for the resulting acts ofinfringement by third parties.’ In other words, file-sharing companies (inthis case, Grokster and Streamcast) can be held liable for inducinginfringement when they distribute a product ‘with the object of promot-ing its use to infringe copyright, as shown by clear expression or otheraffirmative steps taken to foster infringement.’ In this case, the Grokstersoftware (and the StreamCast software) allowed users to swap files with-out having any information go through Grokster’s (or StreamCast’s)computers. It did this by assigning ‘root supernodes’ responsible foracting as the hubs for distribution of music from peer to peer.

Not much has been written about the MGM v Grokster litigation in the UnitedStates in the context of the making available right, but it is worthy of note.Specifically, in describing the infringement claims, the Court expressly saidthat the users of the Grokster and Streamcast service ‘reproduced and distrib-uted copyrighted works in violation of the US Copyright Act’ [emphasisadded]. Later in the opinion, the Court focuses on what files were ‘available’on the networks for download. The Court used the term ‘distribution’ regard-less of the fact that the peer-to-peer system described did not involve anythingmore than users opening up their folders for sharing, that is, ‘making avail-able’ the files, without onward distribution.

The issue of ‘making available’ in recent US casesAs noted, the Congressional drafters in the United States did not deem itnecessary in 1998 to amend US law to explicitly include the ‘making avail-able’ language from the WCT/WPPT. The legislative history of the 1976Copyright Act suggests that the drafters contemplated that an ‘offer to distrib-ute’ would suffice for liability under § 106(3) of the Act and that no copy needchange hands in order for the distribution right to be invoked under US law.Some evidence for this is in the Legislative History of the 1976 Act in whichdrafters referred to the right of ‘publication’ and ‘distribution’ in synonymousterms. The definition of ‘publication’ in § 101 not only subsumes the right of‘distribution’ but also includes the ‘offer to distribute’ works.

Until recently, the minimal case law in the United States regarding themaking available of copyright materials supports the interpretation of the‘distribution’ right as including the right to ‘offer to distribute’ or rather toprohibit the unauthorized offering to distribute copyright materials. One casein point is Hotaling v Church of Jesus Christ of Latter-Day Saints,54 in which


54 Hotaling v Church of Jesus Christ of Latter-Day Saints 118 F.3d 199 (4th Cir.1997).

the 4th Circuit found that placing unauthorized copies of books and an indexof them for users to check out from a library constitutes an infringement of thedistribution right under § 106(3) of the US Copyright Act.

Of even more persuasive effect is the Supreme Court’s decision in NewYork Times Co. v Tasini, 533 US 483, 488 (2001), which held that, notwith-standing absence of proof that individual copies of plaintiffs’ articles on defen-dant’s database were transferred to users of the database, ‘it is clear’ that thedefendants ‘distribute copies’ of the plaintiffs’ articles merely by making themavailable for download.55 The Court rejected the defence that there was nodistribution under US law by the defendants as it was the database subscriberswho were responsible for the downloading.56

Despite such legal precedents, defendants’ lawyers have waged strongdefences in ongoing cases involving individual P2P file sharers brought by therecord companies, claiming that US law does not in fact provide a ‘makingavailable’ right, at least not without proof of an onward distribution. The casescut both ways: some courts have found that the distribution right under §106(3) of the US Copyright Act encompasses the act of making copyrightedmaterials available for electronic distribution on a peer-to-peer network,regardless of whether actual distribution has been shown; other courts havedecided that a § 106(3) claim cannot stand on the grounds that plaintiffs havefailed to show an onward distribution.

The following is a small sample of cases in which a ‘making available’right or its equivalent was found in US law:

• Elektra Entertainment Group Inc. et al v Barker, Case No. 7:05-cv-07340-KMK (S.D.N.Y.) (Opinion and Order, 31 March 2008). In anOrder denying defendant’s motion to dismiss for failure to state a claim,Judge Kenneth Karas agreed that distribution under § 106(3) is essen-tially synonymous with ‘publication’, noting ‘it is unsurprising thatcourts faced with similar allegations as in this Complaint have looked tothe definition of the word “publication” in 17 USC § 101 to construe thedefinition of the word “distribute” in § 106(3)’. The court held that ‘theoffer[] to distribute copies or phonorecords to a group of persons forpurposes of further distribution, public performance, or public display,’


55 Id. at 498, 505. (‘[w]e further conclude that the Print Publishers infringed theAuthors’ copyrights by authorizing the Electronic Publishers to place the Articles in theDatabases.’)

56 Thomas D. Sydnor II, Thomas and Tasini: Did the Making-Available DebateEnd Before It Began?, Progress and Freedom Foundation, Progress Snapshot, Release4.13, June 2008 (e-mail publication) (pointing out that ‘plaintiffs asserted that theircopyrights were infringed when their articles were “placed in” these databases’).

17 USC. § 101, can violate the distribution right of s. 106(3). The judgespecifically equated distribution with publication but said that the plain-tiff needed to re-allege the claim using the proper wording.

• Motown Record Co. v Theresa DePietro, Civ. No. 04-CV-2246, 2007US Dist LEXIS 11626 (E.D. Pa.16 February 2007), at 7.57 In this caseinvolving a downloader using the Kazaa software, Judge Cynthia Rufeof the Eastern District of Pennsylvania stated, ‘[a] plaintiff claiminginfringement of the exclusive distribution right can establish infringe-ment by proof of actual distribution or by proof of offers to distribute,that is proof that the defendant “made available” the copyrightedwork.[38]’ Footnote 38 continues, ‘[w]hile neither the United StatesSupreme Court nor the Third Circuit has confirmed a copyright holder’sexclusive right to make the work available, the Court is convinced that17 USC § 106 encompasses such a right based on its reading of thestatute, the important decision in A&M Records, Inc. v Napster, Inc.,239 F.3d 1004 (9th Circuit 2001), and the opinion offered by theRegister of Copyrights, Marybeth Peters, in a letter to Congressionalhearings on piracy of intellectual property on peer-to-peer networks(‘[M]aking [a work] available for other users of [a] peer to peer networkto download ... constitutes an infringement of the exclusive distributionright, as well as the reproduction right’).’

• Atlantic Recording Corp. v Anderson, No. H-06-3578, 2008 WL2316551 (S.D. Tex. 2008): Summary judgment was granted for plain-tiffs, as defendant placed songs into a shared folder to be distributed.The court found that distribution has been equated with publicationwhich includes ‘the offering to distribute copies or phonorecords to agroup of persons for purposes of further distribution...,’ and ‘makingcopyrighted works available for download via a peer-to-peer networkcontemplates further distribution, and thus constitutes a violation of thecopyright owner’s exclusive distribution right.…’

The following is a small sample of cases in which a ‘making available‘ rightor its equivalent was not found without a showing that there was an onwarddistribution (although London-Sire v Does paves the way for a ‘deemed’ distri-bution theory to succeed; that is, that there can be a reasonable inferencedrawn from the facts in a plaintiff’s favour such that the reasonable fact-findermay infer a distribution actually took place):


57 The procedural posture is denial of plaintiff’s motion for summary judgmentdue to defendant’s claim that she was ‘misidentified’ as the infringer and owing toalleged destruction of evidence by the defendant.

• London-Sire Records, Inc., v Does, No. 04cv12434-NG, 542 F. Supp. 2d153 (D. Mass 2008) (Denial of Motion to Quash): In denying a motionto quash a subpoena (for identification information about ‘Doe’ defen-dants allegedly infringing copyright), the District Court inMassachusetts ruled that ‘publication’ and ‘distribution’ are distinctunder US law, and therefore, ‘the defendants cannot be liable for violat-ing the plaintiffs’ distribution right unless a distribution actuallyoccurred.’ The court then denied the motion to dismiss, noting that theremay be a ‘deemed’ distribution:

But that does not mean that the plaintiffs’ pleadings and evidence are insuf-ficient. The Court can draw from the Complaint and the current record areasonable inference in the plaintiffs’ favor – that where the defendant hascompleted all the necessary steps for a public distribution, a reasonable fact-finder may infer that the distribution actually took place.

• In another case, Atlantic Recording Corp. v Brennan, Civil No.3:07cv232 (JBA), 2008 US Dist. LEXIS 23801 (D. Conn. 13 February2008), the court denied plaintiff’s motion for a default judgment, find-ing the following:

without actual distribution of copies ... there is no violation [of] the distribu-tion right.’ 4 William F. Patry, Patry on Copyright § 13:9 (2007); see also id.N. 10 (collecting cases); Perfect 10, Inc. v Amazon.com, Inc., 508 F.3d 1146,1162 (9th Cir. 2007) (affirming the district court’s finding ‘that distributionrequires an “actual dissemination” of a copy’).

In the most recent case, Capitol Records Inc., v Thomas (D. Minn. 2008),Civil File No. 06-1497 (MJD/RLE) (Memorandum of Law & Order ofSeptember 24, 2008), District of Minnesota Chief Judge Michael Davisordered a new trial, overturning a 4 October 2007 federal jury award of$220,000 in damages to plaintiffs caused by defendant Thomas’s downloading1,702 songs through the Kazaa network (though only 24 were at issue in thecase and subject to statutory damages). The new trial was ordered since it wasunclear whether jurors found liability based on Jury Instruction Number 15(‘[t]he act of making copyrighted sound recordings available for electronicdistribution on a peer-to-peer network, without license from the copyrightowners, violates the copyright owners’ exclusive right of distribution, regard-less of whether actual distribution has been shown’) or based on the actualinfringement (either reproduction or circumstantial evidence of ‘actualdissemination’ which the defendant carried out and which was completedwhen MediaSentry [the firm hired by right holders to collect evidence ofinfringement] downloaded the files). Judge Davis ‘implores’ Congress to enacta legislative fix (which it should be noted could be done by adding ‘or offer to


distribute’ after ‘distribute to adequately cover’ ‘making available’), but JudgeDavis also called the initial damage award ‘unprecedented and oppressive.’

Two aspects of the Judge's Memorandum are worthy of note and will behelpful to right holders, notwithstanding the overall effect of the decision,which is to muddy the legal waters as to the existence of a ‘making available’right per se in the United States. First, Judge Davis indicated that ‘direct proofof actual dissemination is not required by the Copyright Act. Plaintiffs are freeto employ circumstantial evidence to attempt to prove actual dissemination.’Thus, proof that the defendant merely made available files, along withevidence that someone actually downloaded them, or can be deemed to havedownloaded them, may suffice for liability. However, the judge failed todefine what kind of ‘circumstantial evidence’ will suffice. Second, JudgeDavis held that ‘distribution to MediaSentry can form the basis of an infringe-ment claim.’

THE WAY FORWARD

The legislative record (80+ countries adopting an interactive ‘making avail-able’ right in some form) and the case law in most countries demonstrates thatan interactive ‘making available’ right is viewed as a critical part of establish-ing a healthy legal framework for copyright on the Internet. The hallmark ofthis right is that copyright owners should be able to authorize or prohibit actsalong the chain of a communication, including the uploading, the makingavailable (without more), and the onward communication of their materials inthe online space. In the cases in Asia, courts have had little problem findinginfringement when one makes available without authorization copyrightcontent. In essence, making copyright materials available, without more, isakin to taking the steps necessary to facilitate infringement by others, and isan act in itself made subject to copyright liability, whether direct liability orsecondary liability (such as in the Cooper case in Australia). North Americaseems to be struggling a bit more with the concept of the act of merely makingavailable copyright content as a cognizable infringement, but even there, thereis persuasive and powerful precedent, not only in copyright cases, but in othercases dealing with distribution, that no physical object need change hands inorder for there to be a distribution.58 Members of the European Union haveuniversally implemented the interactive making available right into their laws.


58 See, e.g., United States v Shaffer, 472 3d 1219 (10th Cir. 2007) (placing childpornography in a shared folder, and nothing more, constitutes ‘distribution’ under 18USC § 2252A, and there is no requirement to show an actual download).

Indeed, with the damage caused by illegal file sharing to date, the future forcopyright industries, and the music industry which has borne the brunt of ille-gal file sharing most acutely thus far, will depend on the preservation of long-standing legal principles of copyright liability in the online space, includingagainst P2P infringements and unauthorized acts of making available. Thefurther elaboration in case law (or statute if necessary) of secondary liabilityprinciples (or the development of such principles where none exist or wherethey remain under-developed) will likewise be crucial to healthy developmentof copyright protection online.59

In addition, there can be little doubt that increasing cooperation of serviceproviders will be crucial to preserving a legal Internet market. PresidentSarkozy’s 22 November 2007 announcement of the ‘Olivennes Report’ seemedto hold some promise for a new day of cooperation and compromise betweenservice providers and copyright owner interests.60 Under the plan, ISPs agreedthat they would monitor what their customers are doing and pass on informa-tion about persistent pirates to a new independent body in France, with thoseidentified getting a warning and then being threatened with either having theirInternet access cut off or suspended if they do not stop illegal file sharing. Inexchange, right holders agreed to do more – specifically, film-makers agreedto speed up the transfer of movies to DVD and music firms pledged to supportDRM-free tracks on music stores. The Gowers Report in Britain61 and theRenfors Report in Sweden62 both have also recommended to government that


59 See Dixon, Liability of Users and Third Parties for Copyright Infringementson the Internet: Overview of International Developments.

60 Industries have recently noted some progress in cooperation among govern-ments and in courts in Sweden, Belgium, the UK, the US and Asia.

61 Gowers Review of Intellectual Property, December 2006 (HM Treasury onbehalf of the Controller of Her Majesty’s Stationery Office), at http://www.hm-treasury.gov.uk/media/6/E/pbr06_gowers_report_755. Specifically, Recommendation39 provides,

Observe the industry agreement of protocols for sharing data between ISPs andrights holders to remove and disbar users engaged in ‘piracy’. If this has not provedoperationally successful by the end of 2007, Government should consider whetherto legislate.62 The report, by Swedish Justice Department investigator Cecilia Renfors,

proposes a change in Swedish law so that ISPs would be obliged to take action to termi-nate the contracts of certain users who repeatedly use their connection to infringe copy-right. This obligation could be enforced in court by right holders. According to theSwedish Ministry of Justice,

It is proposed that the law be amended so that Internet Service Providers can beordered, under penalty of a fine, to take action such as terminating the contract of asubscriber to prevent continued infringement using the Internet Service Provider’sservices.

ISPs should disconnect persistent infringers, by voluntary agreement if possi-ble or legislation if not. A recent Belgian court ruling in the SABAM v Tiscali 63

case concluded ISPs should address mass copyright infringement and that theyhad the means to do so.

However, on 10 April 2008, the European Parliament64 sent a message toFrance that its brokered deal was unacceptable. Specifically, para. 23 of theEuropean Parliament resolution of 10 April 2008 on cultural industries inEurope states in relevant part, ‘[t]he European Parliament … calls on theCommission and the Member States, to avoid adopting measures conflictingwith civil liberties and human rights and with the principles of proportionality,effectiveness and dissuasiveness, such as the interruption of Internet access.’So, we are at an impasse in Europe. Meanwhile, digital sales are weak inFrance due to high levels of unauthorised file sharing – which prompted theSarkozy plan for action against piracy by ISPs. With high levels of unautho-rized file sharing in other parts of Europe, it is perhaps surprising to see thoseelsewhere battling the French on this point of preserving the Internet for legaltrade in cultural products. Yet, all agree that ISPs are the gatekeepers of theInternet, and as such, the question of how vital a role they must play in curb-ing copyright abuse will remain a vital question for years to come.


The report entitled ‘Music and Film on the Internet – Threat or Opportunity?’ wasproduced in response to a request from Sweden’s Justice Minister. See IFPI welcomesSwedish report calling on ISPs to tackle copyright Infringement, 5 September 2007, athttp://www.ifpi.org/content/section_news/20070905.html.

63 SABAM v Tiscali, No. 04/8975 A of the General Roll (D. Ct. Brussels 28 June2007).

64 European Parliament Resolution of 10 April 2008 on cultural industries inEurope (2007/2153(INI)). para. 23 states in relevant part, ‘The European Parliament …calls on the Commission and the Member States, to avoid adopting measures conflict-ing with civil liberties and human rights and with the principles of proportionality,effectiveness and dissuasiveness, such as the interruption of Internet access.’

3. Secondary liability for copyrightinfringement with regard to hyperlinks

Alain Strowel and Vicky Hanley

Without hyperlinks,1 the World Wide Web would not be so compelling.Hyperlinks are, in a way, the threads with which the Web is spun. Instead ofusers getting tangled in information overload, they find what they are lookingfor by following links for further reference. Without these links, and withoutthe search engines based on hyperlinking, the information posted online wouldlose much of its value as it would not be easy to find.

Despite their clear utility, hyperlinks can raise legal liability issues incertain circumstances. For instance, infringements to personality rights exist ifthe links have been intentionally posted to refer to content that prejudices aperson’s reputation, or certain types of links may raise unfair competitionconcerns or result in trademark infringement; similarly, copyright violationscan arise if hyperlinks are clearly made to promote the dissemination ofinfringing files. It is this latter issue – (secondary) liability for copyrightinfringement involving hyperlinks – into which this chapter delves.

We will begin our discussion in Part I on the dual character of hyperlinksas a technique and as a form or expression that can nevertheless be limited bythe law, followed in Part II by a summary of the forms of (copyright) liabilitythat hyperlinking can entail. Parts III and IV then discuss current case law oncopyright liability for linking. Finally, we will conclude with a discussion onhow some links that trigger liability may in fact constitute ‘dangerous liaisons’and how a few precautions should be taken to maintain ‘good relations’

online.2

71

1 Also referred to, more simply, as ‘links.’ This chapter is based on, andupdates, various contributions that A. Strowel devoted to the issue of linking liability,in particular, the joint article written with N. Ide, ‘Liability With Regard to Hyperlinks’,in Columbia – VLA Journal of Law & the Arts, vol. 24, no. 4, Summer 2001, pp.403–48. Particular thanks to Nicolas Ide for allowing some sections of the 2001 articleto be reused in the present chapter.

2 For an analysis of the precautions to be taken at the contractual and/or tech-nical level, see Alain Strowel (1998), ‘Liaisons dangereuses et bonnes relations surI’lnternet – A propos des hyperliens’, Auteurs & Medias 296.

THE DUAL CHARACTER OF LINKING AS A TECHNIQUEAND A FORM OF EXPRESSION

The Various Techniques for Linking

In the broad sense, a ‘hypertext link’ covers two different things: one relatingto the hidden and the other to the visible aspect of the link. In the technicalsense of the term, a hyperlink is the HTML (HyperText Markup Language3)instruction that tells the browser to go to another document (external link) oranother part of the same document (internal link). In its customary sense, theterm hyperlink refers to the visible part of the link, the word(s) or image(s)used to inform visitors of the web page that they can follow a link.4 The visi-ble part of the link is called a ‘pointer.’ Pointers usually take the form of under-lined words (usually in a different color from the one used for the main text).Sometimes they are represented by a still or moving image, such as a logo,thumbnail reproduction, pushbutton, etc. In the following pages, the words‘hyperlink’ or ‘pointer’ will refer to the visible part of the link (‘the HTMLcode’ will refer to the hidden part of the link).

The function of a hyperlink is to transfer the visitor to another hypertextdocument such as a web page, a specific part of a web page or a picture. Thisfunction can be activated automatically, as is the case with embedded links,5

or by clicking on the pointer. When clicking on a pointer, one is transported toa document located elsewhere online, with its own URL address.6

The techniques used for linking (that is, the type of HTML code) can beclassified into four widely recognized categories: surface linking, deep link-ing, framing, and inlining or embedded linking. Surface linking uses an exter-nal link to transfer the user from the web page of one site (‘the linking site’)to the homepage of another site (‘the linked site’), which is displayed on theuser’s screen in its original form, cleansed of any reference to the linking site(it is sometimes described as an HREF link).7


3 Hyper-Text Markup Language of HTML is the predominant markup languagefor web pages that offers means to describe the structure of text-based information in adocument by denoting certain text as links, headings, paragraphs, lists, and so on (seeHTML entry in Wikipedia.com).

4 However, it could be the URL address or domain name of the page to whichthe hyperlink refers.

5 See Part I on the types of hyperlinks.6 A URL, or Uniform Resource Locator, is a string of characters used to repre-

sent a resource available on the Internet; on the web, it typically starts with ‘http’.7 The basic HTML command used is: <A HREF=”URL of the page providing

the link”> Hypertext Link</A>.

Unlike a surface link that connects the user to the linked site’s homepage,a deep link connects the user to an interior page of the site, that is, any webpage other than the homepage. An HTML command makes it also possible topresent the content of a linked site’s web page inside the frame of the linkingsite; in other words, the frame of the linking site will replace the frame of thelinked site on the user’s screen. With this type of link, the title of the page(above the toolbar) and the address of the linking site (in the address box) arenot replaced by the title and address of the linked site. Therefore, even if usersusually realize that they are browsing the content of another site, the browserdoes not display (solely) the URL of the linked-to site. With inlining or embed-ded links (also referred to as a ‘dynamic’ or ‘automatic’ links), an element(such as an image, a graphic, a logo, etc.) from another web page (belongingto the same or another site) can be inserted into a web page without leavingthe page of the linking site. As an image (or any other embedded element) is anindependent part of a web page, it has its own URL address, namely the placeon the server where the image has been stored in digital form. This instructiontakes the form of an HTML command giving the image’s URL address.8 Thefact that the link is activated automatically by the browser gives surfers theimpression that they are viewing an image from the web page that they arebrowsing while the image actually comes from another web page.9 Thus, anembedded link enables a site operator to insert images without having to copythem. Indeed, the image is not reproduced at any time on the server hosting thelinking site. The image is only reproduced (in a lasting form) on the server onwhich the originating site is stored and (in a temporary form) on the screen ofthe surfer visiting the page containing the embedded link. This technique savesspace on the server hosting the page containing the embedded link.

It is not only linking techniques that can have an impact on third party liabil-ity. Other distinctions between hyperlinks (which overlap in part those that havejust been presented) should be considered such as where the linked page islocated,10 whether the link must be activated by the Internet user, and theextent to which the origin of the linked material is visible.

Secondary liability for copyright infringement 73

8 The basic HTML command used to find the image on the server is <IMGSRC=”URL of the GIF or PEG file”>. For example, if one wants to include a pictureof a Coca-Cola bottle on a page, all one has to do is include the command <IMGSRC=”http://www.cocacola.com/images/bottle1.gif”> in the web page’s HTML code.Such use of protected images – such as the Coca Cola bottle – are submitted to rightsholders consent.

9 Even more so as the URL address of the site from which the image originateswill not be displayed in the space where the URL address of the page opened is usuallydisplayed (or where the URL address to which the user wants to go is entered).

10 Is it an ‘Intra-page’ hyperlink, that is, a link that refers to a URL address situ-ated on the same web page as the linking one; an ‘Internal’ hyperlink, which refers to

The presence of any function automatically prompted by activating a linkshould also be considered. For example, links promoting an automatic down-load can lead to inferences of the link provider’s intent.11

Linking as a Form of Expression

Linking is not only a technique, it has an expressive value. The person placingthe links will consider the quantity and position of the links, the reasons forplacing the links, the impact of these references on the reading and compre-hension of the text, etc. All these variables show how incorporating links in a(online) document contributes to the manifestation of a personal thinking andto a lively (online) marketplace for ideas. Some court decisions, for example,the DeCSS case analysed below, have indeed recognized that links are aprotected expression.

Linking, as a form of expression, should in principle remain free from inter-ference. This results from the various provisions protecting freedom of expres-sion, such as Article 10 of the European Convention on Human Rights(‘ECHR’).12 However, in certain cases, the use of links can infringe the ‘rightsof others’ to quote the terms used in Art. 10(2) ECHR, which allows forrestrictions to the freedom of expression that are (1) ‘prescribed by law’ (2)‘necessary in a democratic society’ and (3) ‘in the interests’ of a ‘legitimateend’ or ‘for the protection of the rights of others’. The rights of others/thirdparties include copyright, as well as personality rights, trademark or unfaircompetition. Obligations prescribed by copyright law can justify some restric-tions to the way hyperlinks are made if such limitations are ‘necessary’ toprotect copyright. In practice, the condition of necessity requires an analysisof the proportionality of the restriction. Links that unnecessarily refer to illicitcontent, such as files infringing copyright, can thus be enjoined.


a URL address situated on a different web page from the linking one, but on the sameweb site; or an ‘External’ hyperlink, which refers to the URL address of another website?

11 See discussion of KODA, NCB, Dansk Artist Forbund, Dansk MusikerForbund & IFPI Denmark, Case Nos. V.L. B-1943-99 and V.L. B-2089-99 (High Ct.of Justice, Western Div., 20 April 2001) infra.

12 Article Art. 10 ECHR: ‘Everyone has the right to freedom of expression. Thisright shall include freedom to hold opinions and to receive and impart information andideas without interference by public authority’.

THE TWO TYPES OF COPYRIGHT LIABILITY FORLINKING: DIRECT AND INDIRECT COPYRIGHTINFRINGEMENT

Direct copyright infringement requires that acts committed by the defendant ina civil action fall within the scope of copyright protection. For a directinfringement to exist, it is necessary to establish the following: (1) the exis-tence of a protected work; (2) infringing use, such as a reproduction, a distri-bution or a communication to the public, and (3) the absence of anyexceptions. We will see that some cases on hyperlinking mainly involve thesethree issues. In particular, cases where the pointer is a protected element raisedirect liability issues. Various Web 2.0 services , such as aggregators of onlinenews through linking (for example, Google.News), can also commit actsfalling under copyright and be involved in direct copyright infringement.

It is also clear from case law that the providers of links (those posting thelinks on a webpage or responsible for the placement of the links on a page) canbe held liable when the hyperlinks point to materials infringing copyright.Secondary liability for copyright infringement can apply in this case.

However, secondary liability can also apply to operators other than theproviders of hyperlinks. The use of hyperlinks raises the delicate problem ofthe liability of online intermediaries, such as the providers hosting the pageswith the links or the providers of information location tools such as searchengines or other aggregators of hyperlinks.

The later analysis of the case law shows that the question of the linkprovider’s complicity in the illegal act committed by the operator of the linkedsite is still controversial and depends on various factual circumstances, such asthe knowledge of the link provider that infringing material is posted on thelinked site.

A fortiori the same can be said about the liability of the hosting provider inthe event of unlawful linking by its client. Indeed, to accept the liability of thehosting ISP, it would be necessary to prove that it is the ‘accomplice of anaccomplice’. In other words, the host could only incur liability if two otherpersons have already been found liable: the operator of the site containing theillegal content would have to be guilty of violating a statutory provision and thelink provider’s complicity in the violation would have to be established. Toclaim the liability of the host provider of the site containing the links iscertainly not the most direct path as the injured party could take action, in prin-ciple, against the host provider of the site on which the illegal content is posted.

The liability of other intermediaries such as search engines or aggregatorsof links raises other issues as shown below by the case law. Pure search func-tionalities will, in principle, more easily escape liability than services, whichalso format the retrieved information and add value to the simple links. This is


illustrated by the difference between Google’s search engine service (auto-matic search and ranking of links based on a computer algorithm, PageRank)and the Google.News service (retrieval and organization of online news thatcomes closer to publishing).

The law in the area of third-party liability derives from a number ofsources: statutory rules specific to the copyright area, case law developmentsin copyright, and more general common law or civil law legal rules. A cleardistinction can be made between the principles followed under US case lawand those applicable in civil law jurisdictions. In the US, third-party liabilityfor copyright infringement generally falls under one of three heads: (1)contributory liability; (2) vicarious liability and (3) inducement liability.13

These different grounds will be analysed below. In a civil law setting, the rele-vant concepts are: (1) knowing assistance, self explanatorily where a thirdparty knowingly assists in the copyright infringements of another; and (2)breach of a duty of care, which necessitates an illegal act and third-partyknowledge and takes into consideration any economic benefit to the thirdparty and its magnitude relative to any costs.

Regarding liability for copyright infringement in relation to linking, threepossible types of situations can be distinguished: cases where the infringementrelates to the use of the pointer (or a collection thereof), cases where theinfringement results from the linking technique or process used, and caseswhere the infringement is caused by the content of the linked site. While thefirst two types of cases can raise direct copyright liability (see below), the thirdtype of case only involves secondary copyright liability (see p. 88).

CASES INVOLVING DIRECT COPYRIGHT LIABILITY

Infringements Relating to the Pointers

The pointers as copyrighted elementsIn most cases, the pointers used for linking reproduce the address of the website to which the link leads. In principle, these addresses do not include copy-righted elements. They are pure facts that, as such, are unprotected.Accordingly, the reproduction of a URL (http) address in the form of a pointerdoes not require any authorization.

In exceptional cases, however, the pointer may be made up of elements thatenjoy copyright protection, such as headlines. While a UK court has addressedthis issue in an early case involving two competing newspapers launching


13 See the contributions of A. Dixon Chapter 1 and J. Ginsburg Chapter 4 in thepresent volume.

online services, a recent Belgian case dealing with the same issue of the use ofheadlines for linking involves a group of newspapers opposing a news aggre-gating service, a typical Web 2.0 service.

Shetland Times v Wills14 In this Scottish case, the defendant, Dr JonathanWills, ran an online news service called the Shetland News, which providedlinks to the site of the Shetland Times. The Shetland News reproduced on itsweb site the headlines of stories published in the print version of the ShetlandTimes and on the latter newspaper’s web site. The plaintiff’s web site was notfinanced by advertising, but the defendant’s site carried advertising banners.15

Users who visited the defendant’s site could click on the headlines, copiedverbatim from the Shetland Times, and then find themselves on the ShetlandTimes’ site, at the page on which the story was posted.

The newspaper brought an action for an interim injunction for copyrightinfringement, alleging in particular an infringement of copyright in the head-lines. In his order of 24 October 1996, the judge hearing the case held that itwas probable that certain headlines – particularly the long ones consisting ofeight words or more – enjoyed copyright protection as literary works and thatconsequently there was prima facie illegal copying.16 In weighing the oppos-ing interests, the judge stressed that it was essential for the plaintiff that its website should be accessible only through its homepage.

The case did not end there. On 11 November 1997, the first day of the trialhearing, the parties came to a settlement under which the Shetland News wasallowed to link to Shetland Times stories using the headlines as pointerssubject to certain conditions:

• The link had to be acknowledged by the legend ‘A Shetland TimesStory’ placed underneath the headline used as pointer;

• The Shetland Times’ logo had to be featured on a button adjacent to thepointer; and

• The legend and the button had to be hypertext links to the title page ofthe Shetland Times’ site.

This case confirms the principle that ‘web-linking’ is authorized in principleunless the linking is done in a manner that is prejudicial to the owner of thelinked to site.17


14 Shetland Times Ltd v Jonathan Wills and Another 1997 SLT 669 (24 October1996).

15 This fact is important in terms of unfair competition.16 Within the meaning of s. 17 of the 1988 Copyright, Designs and Patents Act.17 To this effect, see also V. Marsland (1998), ‘Shetland Times Web-linking

Litigation Settles on First Day Trial’, 13 Computer L. Ass’n Bull 30.

Copiepresse v Google In 2006, an association of Belgian newspapers suedGoogle for copyright infringement before the Brussels Court, claiming that theGoogle.News service, which aggregates and indexes various online publishedarticles, infringes the newspapers’ copyrights on (1) the headlines and (2) thefirst lines of the articles as those elements (as well as the deep hyperlinks tothe linked-to pages) are reproduced on Google.News web pages. The head-lines are used as pointers to the complete articles accessible on the newspaperweb site; thus, clicking on the headlines automatically leads the user to theweb site of the publisher of the article. In first instance, the Brussels Courtconsidered that the headlines, as well as the first sentences of articles, arephrased with special care so as to attract the attention of the reader and thatthey could well be protected by copyright because their form of expression,which often involves word play, is usually original.18 The Court recognizedthat not all the news article headlines can be considered original: some of themin fact appear to be purely descriptive and do not therefore show the distinc-tive stamp of their author, for example, ‘Deserts threatened by global warm-ing’, ‘The King visits Sweden’; nevertheless, others appear original like‘Monaco – between casino and stratego’, and ‘Music: it makes school cool’.

Further, courts in Belgium or France have been more willing to find copy-right infringement for copying headlines than granting copyright protectionfor one (book) title (with some rare exceptions such as for ‘Les Liaisonsdangereuses’ in a well-known case19), especially when there is a massive andrepetitive reproduction of those headlines.

Regarding the copying of the first lines of the articles, which are the ‘hook’sentences, the Court found that it is very possible that they show the originalstamp of the author and are, thus, protected as well.

The Court then had to check whether a copyright exception could apply.None of the possible exceptions were applicable. In particular, the standardquotation exception requires that the incorporated text is used to illustrate aproposition, but in the case of Google.News, the extracts of news articles areautomatically indexed, placed next to one another and classified. The excep-tion for reporting of the news – quotation for informational purposes – wasalso held not applicable as no commentary on the news is to be found onGoogle.News, which is limited to reproducing extracts of articles groupedthematically. Also, for the news reporting exception to apply, the protectedworks can only be incidental to the report and not its principle subject. Therationale of the news reporting exception – that the rapidity with which the


18 See Copiepresse v Google Inc., Trib. 1st Instance Brussels, 13 Febr. 2007[2007] E.C.D.R. 5 at 125.

19 Court of Appeal Paris, 4 April 1960, JCP G, 1960, II, 11659; Dalloz, 1960,535, Note H. Desbois.

information has to be reported does not enable the prior consent of the authorto be sought – is not present in this case as Google could obtain the agreementof the publishers of the indexed web sites in advance.

Google’s argument based on the protection of freedom of expression (Art.10 ECHR) was also rightly rejected by the Brussels Court who considered thatthe freedom to receive and to communicate information can be limited in orderto protect copyright, and that the restriction prescribed by the copyright lawwas appropriate and proportionate in this case. Also, the Court points out thatthe system put in place by Google.News does not involve any human elementas Google does not employ any chief editor to select the articles put on theGoogle.News page. Rather, the service is based on the automatic indexing bythe GoogleBot robot of the press articles made available on the Internet. TheCourt seems to consider that freedom of expression has no real bearing in suchcontext.

The plaintiff thus obtained an injunction against Google that has forcedGoogle to refrain from indexing the articles of Copiepresse members. As anappeal is pending while a settlement is still under negotiation to eventuallydetermine a fair remuneration for this reproduction, access to the articles hasbeen allowed by Copiepresse members, who saw a sharp decline in consulta-tion once their online pages were cut off from Google.News service.Copyright is used here to ensure compensation is paid for the investment madein creating the protected content.

Where images or other visual material (logos, etc.) are used as pointers,they may well enjoy copyright protection, and thus, the hyperlinks mayinfringe copyright. This was the issue with which the visual search engineArriba was confronted. As pointers, Arriba used reduced versions of images,‘thumbnails’, corresponding to the word entered in the search.20 As the casealso involves the issue of the linking technique, it will be addressed below.

A collection of unprotected hyperlinks (pointers)The taking of a directory or collection of links comprising of non-protectedelements, such as http addresses, could raise legal issues as well. While an httpaddress on its own cannot enjoy copyright protection,21 a list of web addresses


20 Kelly v Arriba Soft Corp., 77 F. Supp. 2d 1116 (C.D. Cal. 1999). For furtherdiscussion of this case, see infra ‘infringements involving the use of pointers and link-ing techniques’ at p. 84.

21 Some elements of such an address can however be registered as trademarks(for example, a trademark can protect ‘amazon.com’, not only the second level domainname ‘amazon’), but using those protected signs as pointers to the official web site ofthe trademark owner cannot be considered as objectionable trademark use under the ECtrademark rules.

that is drawn up either in a reasoned manner (the case of directories that selectsites or links from spontaneous registrations by site operators) or automati-cally (the case of search engines) may, on the other hand, be eligible forprotection. To consider this question, it is interesting to compare a set ofhyperlinks to an index, or bibliography. In an index, the establishment of a linkbetween one entry and other words, which may themselves be used as entriesin the index, cannot as such be appropriated by copyright. What is involvedhere is an association and thus a non-copyrightable idea.22 Each link repre-sents a piece of information that may have value in its own right but does notachieve the required level of expression to be protected as a work.

By contrast, an index considered as a whole may be eligible for protectionas a compilation in that the selection of the words reproduced in it, but nottheir arrangement as it is alphabetical as a rule, may be the result of an origi-nal creative effort or, in order to use the established expression, may constitutethe indexer’s own intellectual creation. All those who have had the pleasure ofcompiling an index know that this work requires creative choices. In the sameway, a compilation of hypertext links may enjoy copyright protection, but itwill necessarily be limited in scope as it will concern the whole, or a substan-tial part of it, but not a particular hyperlink (element). A list of hyperlinks thatrequires some substantial investment for collecting, verifying or presentingthem could potentially enjoy the sui generis protection conferred by the ECDirective 96/9 on the legal protection of databases.

Infringements Involving Linking Techniques and Processes

Apart from the cases involving copyrighted pointers, the different linkingtechniques identified above do not give rise to unlawful reproductions orcommunication of works, and no direct copyright infringement is involved.Indeed, the person creating a link never reproduces the linked document. Thisprinciple has been confirmed in various decisions. As one court put it: ‘hyper-linking does not itself involve a violation of the Copyright Act . . . since nocopying is involved’.23

The only copies made are the temporary ones on the screen of the surferwho activates the link, but those copies arguably are exempted from copy-


22 If one reasons in terms of US law, one could say that what is involved is a‘discovery’ (of a conceptual link) which, under s. 102(b) of the Copyright Act, isexcluded from the scope of copyright protection. See also Feist Publ’ns, Inc. v RuralTel. Serv. v Co., 499 US 340, 356 (1991) (copyright protection does not extend to facts,which can be equated with ‘discoveries’).

23 Ticketmaster Corp. v Tickets.com, Inc., 54 USP.Q.2d (BNA) 1344 (C.D, Cal.2000). See also IFPI v T. Olsson, and the Copyright Board of Canada discussed infra.

right.24 In the case of an embedded link, the situation is the same, except thatit is not the surfer, but the browser alone, that activates the link.

Framing and other contextual linksThings are a bit more complex in the case of framing. Indeed, under US law,the question of whether the assembly of (copyrighted) components of thelinked site within the frame of the site of the provider of the link constitutes anew work – either a ‘derivative work’25 or a ‘compilation’26 – is a matter ofdebate. It is also a matter of fact that goes beyond the present contribution.

Another question is whether the provision of a hyperlink, particularly in theform of framing, is not equivalent to an act of communication to the publicwithin the meaning of Article 8 of the WIPO Copyright Treaty of 20 December1996, namely: ‘the making available to the public of works in such a way thatmembers of the public may access these works from a place and at a time indi-vidually chosen by them’.

We do not think this to be the case. As the work is already available to theentire Internet community at the linked site’s web address, linking cannot beheld as a new act of making available to the public. The link does not extendthe work’s audience: surfers who access the work by activating the link canalso consult the page directly, as long as they know its URL. Concluding thatthere is a new communication to the public does not seem justified and wouldcause considerable difficulties in terms of copyright management.

Framing raises other issues in countries with robust moral rights thatprotect in particular the interest of the author to have the work’s integrityprotected. Some changes in the way the author’s content is presented withinthe frame and the advertisement of the linking site might affect its moral inter-ests and might be objected to in some countries.

It is possible to imagine situations in which the mere change of contextbetween the linking site and the linked one could infringe the moral right to


24 In Europe, these temporary copies for browsing purposes are exempt from thereproduction right under Art. 5(1) of the EC Directive 2001/29 on the harmonization ofcertain aspects of copyright and related rights in the information society.

25 This claim was made by the plaintiff in a case involving framing. Withoutdeciding on this matter, the judge nevertheless considered in his order on the defen-dants’ motion to dismiss that such classification was not out of the question.Futuredontics, Inc. v Applied Anagramics, Inc., 45 U.SP.Q.2d (BNA) 2005, 1998 USDist. LEXIS 2265 (C.D. Cal. 1998), available at http://eon.law.harvard.edu/prop-erty/metatags/1998futu.html (accessible on 28 March 2009).

26 This was argued by the plaintiff in Imax Corp. v Showmax Inc., 2000A.C.W.S.J. LEXIS 47376 (Fed. Ct. Jan. 18, 2000) (Can.), available athttp://www.fja.gc.ca/fc/2000/ori/2000fc25888.html. The The court granted an injunc-tion against the defendant, however, without taking a stand on this question.

the integrity of the work. Various courts throughout Europe have already ruledthat certain electronic uses that have the effect of severing the link between anewspaper article and the newspaper to which it belongs could be detrimentalto the journalist’s personal and moral interests; the same reasoning could beapplied to framing, which isolates content from its graphic and ideologicalonline environment.

If we take a hypothetical case similar to Shetland Times,27 allowing thejournalists’ articles to be accessed from a linking site that does not share thesame ideology as the newspaper to which the link pointed might eventuallyjustify an action based on the journalists’ moral rights. In Belgium, the rulingof the Brussels Court of Appeal in a case involving a central database (CentralStation) that was offering an online clipping service with all the articlespublished in Belgium on selected topics went quite far in granting journalistsa right to be published within a specific context. According to the Court:

[I]t is true that a journalist writes for a readership as wide as possible, but within thecontext of the newspaper or magazine that publishes his contributions (“his” news-paper or “his” magazine); and his article features with those of his colleagues whowork, under the same editor, for the same values, in the same publication.28

The Court added that compiling several ‘articles reflecting different leaningsin a single collection’, as in the case of the Central Station database, is a‘change of perspective from that of informing the readership of a single news-paper, and that having authorized distribution intuitu personae on a mediumthat reflects well-defined leanings does not imply that authorization has beengiven for distribution on the Internet.’ The changes resulting from the link, forexample, a frame, or from the context, for example, advertising banners andpop-ups, will be taken into account to assess whether the personal interests ofthe author have been hurt.29 On top of the copyright argument relying on


27 Presented supra.28 Brussels Court of Appeals, Oct. 28, 1997, Auteurs & Médias, 1997, p. 383

(authors’ translation). See also the special issue of the Columbia-VLA Journal of theLaw & Arts: ‘Symposium on Electronic Rights in International Perspective’, 22Colum.-VLA J.L. & Arts 127 (1998), and particularly Jane Ginsburg, ‘ElectronicRights in Belgium and France; General Association of Professional Journalists ofBelgium v Central Station’ (Brussels Court of First Instance, 16 October 1996;Brussels Court of Appeals, 28 October 1997), Union of French Journalists v SDVPlurimedia (Strasbourg Court of Grand Instance, 3 February 1998)’, 22 Colum.-VLAJ.L. & Arts 161 (1998).

29 In the same way, a model’s personality right allows the model to oppose his/herphotographs being made available in a prejudicial context. See Landgericht München I,7 October 2004, 7 O 18165/03 (Playboy-Fotos) (possibility to oppose links and advertis-ing banners associating the photos of a naked Playboy model with pornography).

moral rights, other claims based on other bodies of law (unfair competition,passing-off, etc.) could be raised to oppose framing or other contextualchanges, but those arguments are well beyond the scope of the present contri-bution.

Embedded linksOne must also be more cautious when dealing with embedded links. Indeed,in such cases, visitors do not realize that they are consulting a document that,in fact, comes from another site. At any rate, visitors are given the impressionthat it is the provider of the embedded hyperlink who is communicating thework to the public. It is easier to hold the provider of an embedded link liablefor contributory infringement insofar as he or she quite clearly ‘endorses’ thelinked content that is virtually an integral part of his or her own site throughthe effect of the embedded link. These issues have already been debated in acase brought before the Copyright Board of Canada.

The Tariff 22 case before the Copyright Board of Canada and the SupremeCourt of Canada In the Tariff 22 case, the Society of Composers, Authorsand Music Publishers of Canada (SOCAN) filed a proposed tariff for thepublic performance of musical works through a telecommunications networkfor approval by the Copyright Board as part of an administrative procedurethat is a feature of the Canadian copyright system. This tariff covers primarilyInternet transmissions of musical works. Following a period of consultation,the board determined, in an initial decision of 27 October 1999, which activi-ties on the Internet constitute acts that are subject to the payment of royalties.30

When considering acts of communication to the public, the board made aninteresting distinction between embedded links, which can be likened to actsof communication to the public, and other types of links, which do not implyany communication to the public:

The person that creates an embedded hyperlink to a work authorizes its communi-cation. The person that merely supplies a link which must be activated by the userdoes not.….

In itself, the creation of hyperlinks does not involve a communication to thepublic of any works contained at the linked sites. In their simplest form, hyperlinksrepresent an electronic directory of addresses.


30 Public Performance of Musical Works, Copyright Board of Canada, 27October 27, 1999, available at http://www.cb-cda.gc.ca/decisions/m27101999-b.pdf.This case went up to the Supreme Court of Canada (Society of Composers, Authors andMusic Publishers of Canada v Canadian Assn. of Internet Providers, 2004 SCC 45,[2004] 2 SCR 427).

However, the content provider who includes into a Web page an automatic linkthat effects the transmission of a musical work to the recipient without the need forfurther action by the end user holds itself out as responsible for the material at thelinked sites and, therefore, authorizes its communication. This will be true even inthe absence of a business relationship with the owner of the linked sites. By creat-ing such automatic hyperlinks, the site owner makes itself ‘a party in interest to the[communication] by warranting the right to [communicate]’.31,32

Thus, some form of ‘authorization’ is arguably involved in the case of embed-ded links, which results in the possibility of holding the provider of an automaticlink as indirectly liable for copyright infringement under Canadian law (andunder other laws based on the UK-originated concept of ‘authorization’).33

Infringements Involving the use of Pointers and Linking Techniques

Other copyright cases on linking combine the issues resulting from the use ofprotected elements as pointers and those generated by the type of links. Directcopyright liability is involved here, and the main issue is the application ornon-application of copyright exceptions, as shown in the US Kelly v Arribacase where the scope of the ‘fair use’ exemption is the core of the debate.

Kelly v Arriba34 In this case, the visual search engine ‘Arriba’ (currentlyavailable at www.ditto.com) enabled users to search for images on the Interneton whatever words the user entered. The results of the search were presentedas reduced ‘thumbnail’ pictures. These reduced photographs also served ashyperlinks. By clicking on a ‘thumbnail’, the image (located on a third party’sweb site) was extracted from the original site and presented to the user in anew window, in its original size and with a few ‘attributes’, including the URLaddress of the site from which it originated. This URL address also served asa hyperlink to the page containing the image. Thus, the page of the site fromwhich the image originated was not presented to the user.35


31 Muzak Corp. v Composers, Authors and Publishers Assoc. (Canada), [1953]2. SCR 182, at 189.

32 Public Performance of Musical Works, Copyright Board of Canada, 27October 1999, at 27, 48. The distinction between automatic links and user-activatedlinks seems to be shared by the Supreme Court of Canada (see Society of Composers,Authors and Music Publishers of Canada v Canadian Assn. of Internet Providers, 2004SCC 45, [2004] 2 SCR 427 at § 25).

33 See the contributions of G. Austin Chapter 5, A. Dixon Chapter 1, and J.Ginsburg Chapter 4 in the present volume for further developments on the ‘authoriza-tion’ approach for secondary copyright liability.

34 Kelly v Arriba Soft Corp., 77F. Supp. 2d 1116 (C.D. Cal. 1999).35 In a later version of its search engine, Arriba made a change so that two

The plaintiff, a photographer with his own site who had at least 35photographs indexed by Arriba, objected to Arriba’s use of his works on copy-right grounds. It should be noted that Arriba did not dispute the allegation thatit reproduced and displayed the plaintiff’s photographs. In its defence, Arribarelied on the ‘fair use’ exception.36 In his discussion, the judge found thatseveral factors weighed in favour of fair use. First, Arriba’s use of thephotographs was considered as ‘transformative’ in nature, a factor identifiedby the Supreme Court to define ‘fair use’ in case of parody:37

Defendant’s use is very different from the use for which the images were originallycreated. Plaintiff’s photographs are artistic works used for illustrative purposes.Defendant’s visual search engine is designed to catalog and improve access toimages on the Internet. The character of the thumbnail index is not esthetic, butfunctional; its purpose is not to be artistic, but to be comprehensive.38

While we somewhat doubt that the ‘transformative’ nature of the use, asdefined by the Supreme Court, is present in the Arriba case we will not delvefurther as the issue goes beyond the scope of this chapter.

Second, the judge was sympathetic to Arriba’s argument that the hyperlinksproduced by its search engine increased the number of visits to the photogra-pher’s site, implying that economic harm39 was not established.40

As to the amount and substantiality of the portion of the original work used,which in this case was all of it but in reduced, thumbnail format, the judge heldthat this practice seemed reasonably justified with regard to the engine’sindexing purpose, but that, in the case of the display of the photographs in theiroriginal size in a new window, this practice was not necessary for the searchengine’s purpose of information retrieval.41


windows appeared when the ‘thumbnail’ was activated, one containing the image andattributes (as before) and the other containing the web page from which the image orig-inated. This was viewed as a point in Arriba’s favour when the judge was assessing thefair use factors. Id. at 1120 n.8.

36 Section 107 of the US Copyright Act requires a consideration of four factorsfor assessing ‘fair use’:

‘(1) the purpose and character of the use, including whether such use is of acommercial nature or is for nonprofit educational purposes;(2) the nature of the copyrighted work;(3) the amount and substantiality of the portion used in relation to the copyrightedwork as a whole; and

(4) the effect of the use upon the potential market for or value of the copyrightedwork.’37 See Campbell v Acuff-Rose Music, Inc., 510 US 569 (1994).38 Kelly, 77 F. Supp. 2d at 1119.39 The fourth factor to be considered in determining whether there is ‘fair use’

under s. 107 of the US Copyright Act.40 Id. at 1120–21.41 Id. at 1120.

In the final balance of interests, the judge concluded that the various factorsreferred to above weighed in favour of fair use. The judge stressed the deci-sive importance of search engines for the Internet in ultimately authorizingArriba’s use of the photographs:

The first and fourth factors (character of use and lack of market harm) weigh infavor of a fair use finding because of the established importance of search enginesand the ‘transformative’ nature of using reduced versions of images to organize andprovide access to them. Plaintiff’s images were swept along with two million othersavailable on the Internet, as part of Defendant’s efforts to provide its users with abetter way to find images on the Internet. Defendant’s purposes were and are inher-ently transformative […].42

In 2002, the Ninth Circuit affirmed this decision in part and reversed it inpart.43 The Court held that the defendant’s actions in copying the photographsto create the thumbnail images were not infringing because they were deemedto be a fair use of the copyright works. The smaller, lower resolution thumb-nail images were found to fulfil a different function from the plaintiff’s origi-nal images. The copies were merely used to facilitate access to the images bycataloguing them in response to search results. In addition, their reduced reso-lution would prevent them being used effectively for the same artistic purposeas the originals, as any enlargement would result in a loss of the images’ clar-ity. The Court went further than the District Court, holding that the display ofthe full-size version of the images when a thumbnail was clicked, however,was held to be an infringement of the plaintiff’s exclusive right to publiclydisplay the copyright work.44 It should be noted that the image displayed wasimported directly from the plaintiff’s site and the defendant did not copy theimages. The Court held that this public display of the full-size images was nota fair use because the defendant’s use of the images was not for a differentpurpose than the plaintiff’s use of them and the defendant’s use of the imageswas likely to divert web users away from the plaintiff’s site, thereby damag-ing the plaintiff’s market for sales and licensing of the images.

In 2003, the same Court also affirmed the original finding that the defen-dant’s copying of the plaintiff’s photographs to create and retrieve the thumb-nail images was a non-infringing fair use.45 However, the Court avoidedresolving the issue of whether the embedded linking to and framing of the full-size images hosted by third-party web sites was infringing. Instead, the


42 Id. at 1121.43 Kelly v Arriba Soft Corporation 280 F 3d 934 (9th Cir, 2002), withdrawn 9th

Cir 3 July 2003.44 Section 106 of the US Copyright Act.45 Kelly v Arriba Soft Corp 336 F 3d 811 (9th Cir, 2003).

District Court’s opinion on this point was reversed as it was held to have madean ultra vires ruling.

The Courts finding that search engines’ reproduction of images for use asthumbnails is fair use under the Copyright Act was upheld by the same NinthCircuit Appeal Court in the later Perfect 10 v Google case,46 a case that willbe further reviewed below under the indirect liability heading. The DistrictCourt of California had originally ruled that the fair use defence did not applyto Google’s use of thumbnail images it created, as these thumbnail imagescould be downloaded for use with a cell phone in direct competition with asimilar service provided by Perfect 10. On appeal, the decision to vacate theDistrict Court’s original ruling relied heavily on the fact that there was noevidence to support the use of Google’s thumbnails for cell phone down-loads.47

Other cases involving linking to photographs A German First Instance Courtalso considered that offering links consisting of thumbnail reproductions of artworks does not trigger copyright liability when the creator of those works hasconsented to their online reproduction.48 To reach this conclusion, however,the decision relied on a completely different reasoning: the Court held that, bymaking available the thumbnails, the defendant Google had violated thecommunication to the public and the reproduction right belonging to thecreator; contrary to the decision in Kelly v Arriba, no exception was discussedby the Court to exempt this use from copyright liability. Rather, the Courtconsidered that an implied consent to such use could be derived from the factthe artist had first released the photographs on her web site. The works werebroadly available at no cost and her web site did not use any metadata (suchas ‘robottxt’), thus, indicating she consented to the use of thumbnails.

The issue of implied consent is regularly discussed in cases involvingsearch engines and Google in particular. In the Belgian case Copiepresse vGoogle (see above), the argument was also made against the copies of thepress articles made on the Google cache pages. The press publishers in partic-ular complained about the online availability of protected articles, throughcache copies, that were no longer available on the publishers’ web pages. Byindexing those pages and storing them as cache copies, Google was offeringfree access to articles for which the readers should in principle pay. Accordingto the publishing model adopted, the articles are removed from the online web


46 Perfect 10, Inc. v Amazom.com, Inc., No. 06-55405 (9th Cir., 16 May 2007).47 See infra for a discussion of the Court’s ruling in relation to Google’s liabil-

ity for secondary infringement.48 LG Erfurt, 15 March 2007 – 3 O 1108/05, MMR 2007 Heft 6 p. 393

(Thumbnails bei Google).

site a few days after their placement and are then only accessible subject topayment. Google’s practice was bypassing the business model used by thosepublishers. In such a case, the argument that some form of implied consentresults from the fact no metadata is used by the publisher to prohibit the auto-matic indexing and the cache copies has some validity.

In addition to the infringement of copyright subsiding in a photographicimage, the provision of links to photographs can fall foul of privacy rights. Thedefence of ‘implied consent’ was also applied by the District Court for theDistrict of South Carolina when considering the infringement of privacy rightsin the context of a hyperlink to a photograph on a publicly accessible web site.In October 2007, the Court held:

a person who places a photograph on the Internet precisely intends to forsake andrenounce all privacy rights to such imagery, particularly undercircumstances…where [the subject] did not employ protective measures or devicesthat would have controlled access to the Web page or the photograph itself.49

In light of the conflicting verdicts of the US and German courts in relation tosearch engines’ use of thumbnails, the visual search engine is left without therequisite legal certainty on which to build a stable business model.

A different issue, one which we shall address later, is whether there couldbe complicity on the part of the provider of the link in making the work postedon the linked-to site available.

CASES INVOLVING INDIRECT COPYRIGHT LIABILITYCAUSED BY THE CONTENT OF THE LINKED SITE

When considering the liability of intermediaries for linking to third partyinfringing sites the courts have not always succeeded in drawing a watertightdistinction between primary and secondary liability. Also, in the context of thenew Web 2.0 services that rely on the aggregation of content through the useof links and other information location tools, pure links are accompanied moreand more by value-added content, such as extracts or thumbnail reproductions,appearing on the linking page, thus reinforcing the probability of a directinfringement of copyright in addition to the possible indirect liability for link-ing (to illicitly posted content). Besides, in the absence of being able to estab-lish the requisite elements for secondary liability, the courts have tended torely upon principles of direct copyright infringement in order to establish theliability of intermediaries.


49 Bidzerk LLC v Smith, 2007 WL 3119445(D.S.C.) at 10.

Posting of URL Addresses

Mormon Church v Utah Lighthouse Ministry50 This US case can bementioned although it did not involve hyperlinking, but instead, the simpleplacement of URL addresses on a web page (the addresses were not activatedas pointers). In this case, the Utah Lighthouse Ministry and Mr and MrsTanners (the founders of this association) operated a web site on which,initially, they had posted Mormon texts without the authorization of the rightholder (the Intellectual Reserve Inc., as the owner of the rights in the texts ofthe Mormon Church). Following a formal notification from the latter, theyhad agreed to remove the texts at issue but kept the addresses of three othersites where visitors could find the texts that they had removed from their ownsite.

The Court began by confirming that the operators of the three web sites(who were not parties to the action) containing the texts at issue were infring-ing the Church’s copyrights. To the question whether the defendants hadincited, caused or physically contributed to the infringement by providing thethree web site addresses, the Court replied in the negative; nevertheless, itwent on to find the defendants liable on the grounds that they were contribut-ing to the infringing transitory reproductions made by surfers who wereencouraged to follow the addresses to browse the infringing material. In orderto come to such a finding, the judge obviously had to accept that transitoryreproductions of a work infringe copyright – a difficult topic, also beyond thescope here.51 Rather than following this approach, the Court would probablyhave been more inspired to interpret the criteria for contributory infringementsomewhat differently.

Links to Copyrighted File (MP3 Cases)

IFPI v T. Olsson In this Swedish case, IFPI, which represents the producersof phonograms, had filed a complaint prompting the Public Prosecutor to initi-ate criminal proceedings against Tommy Olsson for having provided hyper-links to sites containing allegedly illegal MP3 files. After having noted that,when an MP3 file was downloaded by a user, no copy of the file was made byOlsson on a physical medium, including his own hard disk, the Göta Court of


50 Intellectual Reserve Inc. v Utah Lighthouse Ministry Inc., 75 F. Sapp. 2d 1290(D. Utah 1999).

51 In Europe, it is unlikely that such an approach would be taken as temporaryreproductions will most likely be exempted under Article Art. 5.1 of the Directive onCopyright and Neighbouring Rights in the Information Society.

Appeal decided that he was not guilty of unlawful distribution of phonograms,and he had committed no infringement under Swedish copyright law.52

The Court that initially heard the case had not ruled out the possibility thatOlsson might be held liable for contributory copyright infringement withouttaking a stand on the matter.53,54 On the question of complicity, the Court ofAppeal identified (as in the Utah Lighthouse Ministry case above) two possi-ble charges. First, could Olsson be found guilty of contributory infringementwith regard to the illegal acts of communication to the public committed bythe operators of the linked-to sites? In this regard, the Court of Appeal heldthat Olsson could not be convicted of contributory infringement because it wasnot established that the MP3 files were infringing the copyright law applica-ble to sites hosted abroad. As in the case of P2P involving uploaders locatedall over the world, we believe it is very difficult to require a court to verifywhether a primary copyright infringement occurred in all the foreign countrieswhere the illicit files are located, and a ‘de facto export’ of national law is thusnecessary in this regard. 55 Second, could Olsson be found guilty of contribu-tory infringement as regards the copies of MP3 files made by Internet userswho downloaded the files? Here the Court held that Olsson could not beconvicted for complicity in the unlawful reproduction of phonograms becauseit had not been shown that the copies made by the Internet users could notbenefit from the exception for private use.

The Supreme Court56 handled the case differently. It first relied on primaryliability and ruled that linking to music amounted to making music availableto the public, an act prohibited under Swedish copyright law.57 The SupremeCourt then recalled that if, under Swedish law, an author has the right toprohibit any making available to the public of his or her work, producers ofphonograms, such as the plaintiffs, only had a right to equitable compensationin the case of phonograms made available to the public. Therefore, plaintiffscould not prohibit the dissemination of their phonograms through T. Olsson’shyperlinks, regardless of whether such making available involved a legal orillegal copy. Without engaging in a discussion on Swedish law, we think thatlinking to content does not amount to a form of communication to the public


52 IFPI v T. Olsson, unreported, no. B 1009-99 (Göta, Court of Appeals 1999)(Swed.).

53 The public prosecutor had failed to state this claim.54 IFPI v T. Olsson, unreported, no. B 824-99, (Tingsrätt Skövde 1999) (Swed.).55 See on this particular issue, the contribution of G. Austin Chapter 5 in the

present volume.56 IFPI v T. Olsson, unreported, no. B 413-00, (Stockholm Supreme Court

2000).57 See discussion of Tono v Bruvik infra.

and should thus be tackled under a secondary liability theory, as illustrated inthe cases which follow.

KODA, NCB, Dansk Artist Forbund, Dansk Musiker Forbund & IFPIDenmark58 The plaintiffs in this Danish case are organisations collectivelyrepresenting artists and producers. The defendants are individuals who createdhomepages deemed to have infringed the rights of those represented by theplaintiffs. The two cases both consider whether the creation of deep links,which enable others to copy music tracks that are illegally made available onthe Internet without permission from the rightful owners, infringes rightsunder the Danish Copyright Act. The deep links involved in these cases arecharacterised by automatic downloading of an MP3 file once the users activatethe deep link, that is, clicking on the deep link creates a direct copying accessto the MP3 file. The user is prompted with two options on activating a link:the user may choose to open the MP3 file at its present location, that is, theserver in which it is placed; or may choose to save the file on hard disk. In thefirst instance, the file is copied to the ‘cache’ and may subsequently be usedexactly as if the user had specifically selected where the file was to be saved.

The defendants’ homepages consisted of alphabetical lists of collectivelymore than 446 Danish and foreign music tracks and direct links were createdto the music tracks located on servers around the world. The Court upheld theclaim that the defendants were not authorised to create direct links to musictracks or to copy and/or participate in other peoples’ copying of music tracks,which are illegally made available on the Internet. The Danish High Courtheld that, by establishing direct links to the tracks, the defendants indepen-dently made the tracks available to the public in a manner that can becompared to public performance contrary to the Copyright Act. The Court thenwent on to discuss principles of secondary liability in order to establish therequisite intent to impose a fine on the defendants. As well as being helddirectly liable for making tracks available to the public, the Court found thedefendants increased the possibility of those wanting to copy music of findingthe music, facilitating faster and easier copying. On this basis, the Court foundthe defendants had aided the illegal copying. An instrumental factor in estab-lishing the defendants mens rea was messages appearing on the defendants’homepages, such as the following: ‘Some of the files must be renamed afterdownloading’; ‘I have removed all banners because it takes longer to D/Lpages with banners :) …’; and ‘…if you download some of these files, you


58 KODA, NCB, Dansk Artist Forbund, Dansk Musiker Forbund & IFPIDenmark, Case Nos. V.L. B-1943-99 and V.L. B-2089-99 (High Ct. of Justice, WesternDiv., 20 April 2001).

must be aware that you violate Danish Law…’.59 In establishing indirectliability, the Court’s interpretation is more consistent with other cases (see theDeCSS cases discussed below), but to be established it requires additionalelements such as the knowledge of the infringing element linked-to and theintention to promote its further dissemination.

IFPI v Beckers In this Belgian case, the finding of secondary liability wasestablished in first instance and on appeal.60 The president of the AntwerpCourt of First Instance (in summary proceedings) held that the provider oflinks to sites containing MP3 files furnished Internet users with the means ofinfringing the neighbouring rights of record producers. The judge consideredthe following:

A link is not a simple footnote. By activating a link, one has access to a site. Toaccess a site, one must first be able to locate and activate it. The purpose of linkingis precisely to provide this service to users. In this case, the defendant intended toestablish links to sites from which music could be downloaded illegally, i.e., with-out paying any royalties to the copyright owner. Downloading pieces of music thatare protected by copyright constitutes an offence. Even the defendant considers itillegal. The purpose of providing links – in this case a veritable discotheque of links– on a web site is helping users and to provide them with the key needed to down-load music illegally. The provider of such a key makes an offence directly possibleand is liable as a result for doing so. The fact that it is possible to commit the sameoffence by other means and that a pirate does not necessarily have to follow theroute proposed by the defendant – there are indeed many roads leading to MP3s –does not diminish or preclude the liability of the person who makes one particularpath available to the public.61

Although the judge does not actually use the terms ‘contributory infringement’or ‘complicity’, he applies the theory of the link provider’s complicity to unlaw-ful acts of reproduction committed by Internet users. As confirmed on appeal,the conduct of the link provider is (probably) not compatible with the obligationof ‘due care’ that can be deduced from the general principles of civil law. TheCourt of Appeal held that the balance of interest (in summary proceedings)weighs in favour of granting a provisional injunction against the link provider.

TONO v Bruvik62 In 2005, the Norwegian Supreme Court establishedsecondary liability for the act of creating links to copyrighted MP3 files. This


59 The citations are taken from a translation of the original text.60 Beckers v IFPI, No. 2000/RK/27 (First Chamber, Court of Appeal, Antwerp,

26 June 2001) confirming Court of First Instance, Antwerp, 21 December 1999, RG99/23830.

61 Id. (authors’ translation from original).62 TONO v Bruvik, Civil Case No. 2004/822 (S. Ct. Norway, 27 January 2005).

case concerned a student who created a web site, www.napster.no, whichcontained links to music files in MP3 format that were available at variousInternet addresses. The site’s opening page contained a link entitled ‘add anMP3’ where users were invited to enter the name of an artist, title and Webaddress of the relevant music file following which a new page would be createdwith a link to the music file.63 Bruvik in this case did not upload the music files,but published links to the music files. It was considered to be a key issue in thiscase that the users of Bruvik’s site obtained direct access to the music files byclicking the links he presented and that the downloads from the site where themusic files were stored were automatically prompted. On clicking the link, theuser was given the option of playing the music, downloading the music or abort-ing the download. Bruvik did not use the files himself, nor store or copy the files;he merely referenced sites where works were already made accessible.

In 2003, the District Court found the defendant guilty of directly infringingcopyright holders’ exclusive rights to make works available to the publicpursuant to the Copyright Act by publishing links to the illegally uploadedmusic files. The Court of Appeal overturned this decision holding that thepublication of links does not constitute making works available to the publicnor render the defendant contributorily liable to the uploading of music filesby others. By publishing links to music files, the defendant was held tocontribute to the actions of downloaders in playing or copying such files.However, downloading for private use is not illegal in Norway, so no liabilitywas established. The Supreme Court, upon further appeal, unanimously over-turned the decision of the Appellate Court and affirmed the Court of FirstInstance’s finding of liability but based on different reasons. The SupremeCourt relied on principles of secondary liability to find Bruvik contributorilyliable for infringement based on the presumption that his contributory action,that is, linking, alone does not need to be regarded as an act of making workspublicly available. The Supreme Court established indirect liability findingthat Bruvik’s linking exacerbated the effects of the uploaders’ actions byincreasing the availability of the music. It also found his actions to have beenintentional, wilful and committed with the knowledge that music wasuploaded without the consent of the right’s holders.64

Stichting BREIN v Techno Design65 The Amsterdam Court of Appeal reliedon the theory of indirect liability to establish liability in this case. Techno


63 The reference would be created under www.napster.no.64 See also the contribution of A. Dixon Chapter 1 in the present volume.65 Stichting BREIN v Techno Design ‘Internet Programming’ BV, (Ct. App.

Amsterdam, 5th Civ. Div., 15 June 2006), overruling Techno Design ‘InternetProgramming’ BV v BREIN (D. Ct. Haarlem, 12 May 2004).

Design was operating a web site called ‘zoekMP3.nl’ (in English‘searchMP3.nl’) that facilitated the location of MP3 files on the Internet. Auser could type in a request for a music file and the search tool would retrievehyperlinks, in particular deep links, to the requested MP3 files. Clicking on thelinks would trigger the automatic downloading of the music files on the user’scomputer. The plaintiff who represents various copyright holders in theNetherlands sought to enjoin Techno Design’s service. In first instance, theplaintiff’s action relying on direct infringement was rightly dismissed: TechnoDesign had not committed any ‘publication/communication to the public’ inthe sense of the Dutch Copyright Act.

On appeal, the Court of Amsterdam found Techno Design indirectly liablefor facilitating the illicit acts of third parties. Three main elements are under-lined in the Court’s decision. First, Techno Design’s service involves morethan the mere provision of physical facilities for enabling or making a commu-nication. It is not merely passive: the search service processes the collecteddata so as to facilitate the downloading of the MP3 files by the users.Secondly, the defendant had not convincingly proved it ignored that most ofthe files made available online were not authorized; by itself, the use of auto-matic tools such as web-spiders does not imply a lack of knowledge. A thirdelement was also emphasized by the Court of Appeal: Techno Design was infact benefiting from the illicit activities of third parties as (1) its search servicerelied on advertising revenues and (2) the increased traffic on its search pageswould allow Techno Design to sell more ringtones (an ancillary serviceoffered by the defendant). As stressed by the Court, the ‘structural’ use of theillicit MP3 files available on the web does not take into account the legitimateinterest of the copyright holders and is not compatible with the ‘duty of care’required from such an undertaking. Once those facts are present – the inter-mediary plays an active role, has sufficient knowledge of the illicit content andbenefits from it – the fact that it is not possible for the search tool to distin-guish between licit and illicit MP3 files is irrelevant for the outcome of suchcase.

Other jurisdictions have relied on alternative concepts of third-party liability.Examples from recent Australian and Chinese case law are discussed below.

Universal Music Pty. Ltd. v Cooper66 This Australian case establishessecondary liability by relying on the alternative concept of ‘authorising’


66 Universal Music Pty. Ltd. v Cooper, [2005] FCA 971 (Fed. Ct. Australia, 17July 2005), http://www.austlii.edu.au/cgi-bin/disp.pl/au/cases/cth/federal%5fct/2005/972.html Cooper v Universal Music Australia Pty. Ltd., [2006] FCAFC 187 (Fed.Ct. Full Court Appeal, 18 December 2006) http://www.austlii.edu.au/au/cases/cth/FCAFC/2006/187.html.

infringement.67 A number of record companies, including Universal Music,Sony and EMI brought a claim for copyright infringement against StephenCooper, the registered owner of a web site. Claims were also brought againstthe Internet Service Providers, E-Talk Communications and Com-Cem,68 aswell as an employee of E-Talk and the Director of E-Talk and Com-Cem.Cooper’s web site provided access to sound recordings via hyperlinks. A userclicking on a hyperlink would have the relevant music file transmitted directlyto their computer from a remote server.

At first instance, Cooper was held liable for ‘authorising’ the infringementof copyright in the sound recordings, both by Internet users who downloadedthe recordings and the operators of the remote web sites. E-TalkCommunications and one of its employees were also found to be liable fortheir respective actions in hosting and assisting with the operation of Cooper’sweb site. Under s. 101 of the Australian Copyright Act 1968, a personinfringes copyright where it authorises any act that infringes the copyright. Indetermining authorisation, the Court must take into account the following,non-exhaustive, factors:

(a) the extent (if any) of the person’s power to prevent the doing of the actconcerned;(b) the nature of any relationship existing between the person and the person whodid the act concerned;(c) whether the person took any other reasonable steps to prevent or avoid the doingof the act, including whether the person complied with any relevant industry codesof practice.69

On appeal, the Court considered the factors listed at subs. 101(1A) of theAustralian Copyright Act 1968. In relation to the first factor, the power toprevent, the Court’s decision was based on the fact that ‘Mr Cooper deliber-ately designed the web site to facilitate infringing downloading of soundrecordings’.70 It was held that he could not rely on his indifference to the useof his web site to support his inability to prevent the infringement. Cooper’sfinancial benefit from the advertising and sponsorship on his web site led theCourt to assume a commercial relationship between Cooper and the users ofhis web site. Cooper included on his web site disclaimers, which misstated


67 See also the contributions of A. Dixon Chapter 1, J. Ginsburg Chapter 4 andM. Schlesinger Chapter 2 in the present volume.

68 A trading name of E-talk Communications.69 Subsection 101(1A) of the Australian Copyright Act 1968, introduced by a

2000 Amendment.70 Universal Music Australia Pty. Ltd. v Cooper, [2006] FCAFC 187 (Fed. Ct.

Full Court Appeal, 18 Dec. 2006) at 149.

Australian copyright law. The Court did not find that Cooper took reasonablesteps to prevent infringement. In fact, the intended purpose of the disclaimerswas interpreted as purely cosmetic.

The Internet Service Provider E-Talk and its Director were also found liablefor copyright infringement. E-Talk’s actions were found to have gone beyondsimply providing ‘facilities for making, or facilitating the making of, acommunication’71 because it was aware of the copyright infringements, ithosted Cooper’s web site (MP3s4free.net) for free in return for advertising onthe site, and it had the power to prevent the infringing conduct by taking downthe web site itself or declining to provide its host facilities. Conversely, theAppeal Court overturned the original decision in relation to the E-Talkemployee. In his capacity of employee, he did not possess the power to, norcould he have taken reasonable steps to, prevent copyright infringement, andhe had no relationship with the users of Cooper’s web site.

Cooper sought to rely on the Perfect 10 case (see below) and placed consid-erable weight on a suggested analogy between his web site and Google’sgeneral search facility. It should be noted that this analogy was rejected by theCourt, and it clearly differentiated Cooper’s site from a general search engine,stating ‘Google is a general purpose search engine rather than a web sitedesigned to facilitate the downloading of music files’.72

Baidu and Yahoo China cases The Chinese Courts have used the concept of‘assisting’ infringement to establish the secondary liability of search enginesproviding links to copyrighted materials. The Beijing No 1 and the Beijing No2 Intermediate People’s Courts simultaneously reached opposing decisionsregarding the liability of search engines for copyright infringement on provid-ing links to infringing music files.73

China’s most popular search engine, Baidu,74 was accused by severalrecord companies, including EMI, SonyBMG, Universal and Warner, of copy-right infringement through its automated MP3 search engine.75 The companiesclaimed that by providing links to music files, Baidu infringed their commu-nication right under Chinese law. At issue in this case was whether Baidu hadcommunicated MP3 songs to the public by allowing users to search and down-


71 Section 112E of the Australian Copyright Act 1968.72 Universal Music Australia Pty. Ltd v Cooper. [2006] FCAFC 187 (Fed. Ct.

Full Court Appeal, 18 December 2006) at 40.73 See also the contribution of M. Schlesinger in the present volume.74 Located at http://MP3.baidu.com.75 Gold Label Entertainment Ltd. v Beijing Baidu Network Information Scien-

tech Co., Ltd., Civ. v No. (2005) 7965 Yi Zhong Min Chu Zi (Beijing No. 1Intermediate People’s Court, 17 November 2006).

load illegal MP3 files through the Baidu MP3 search engine service. Baidu didnot directly upload MP3 files to their servers; they merely provided links toMP3 files stored on other servers.

Beijing No. 1 Intermediate People’s Court held that, as the relevant MP3files originated from other web servers and not the Baidu web site, thecommunication occurs between the users downloading the MP3 files and theweb site that uploads the files.76 The Court ruled that a web site providinglinks was not directly liable as it did not engage in the act of communicationvia the Internet under the Copyright Law of the People’s Republic of China.77

However, the Court confirmed that Baidu could be indirectly liable for partic-ipating in and assisting third-party sites in transmitting infringing music.78

The Baidu case was considered under an old law that is no longer in force,and therefore, this judgement can be considered as having been superseded bythe Yahoo! China ruling.

The Beijing No. 2 Intermediate People’s Court rejected Yahoo! China’s79

appeal against a decision holding it to be liable for ‘assisting infringement’ forlinking to web sites offering illicit content.80 The Court ruled that the providerof a searching or linking service is not liable for infringement where links toinfringing material are disabled following receipt of notice from the rightsowner. The Court clarified that a web site would not be liable where copyrightowners had not sent adequate notices of infringements, however, it would bejointly liable for infringement if it is aware of or ought to know that the linkedwork, performance or phonogram product constitutes an infringement andfails to remove the link.81

Linking to File-sharing Programs

Phonefile v Startsiden82 The facts in this Norwegian case differ from those


76 See Wang Qian, ‘A ‘Direct’ Decision vs an ‘Indirect’ Problem: A Commentaryon Seven Record Labels vs Baidu.com’ (2007) 1 Journal of China Copyright.

77 This decision has been superseded by contemporaneous decision of theBeijing No. 2 Intermediary Court infra.

78 Baidu was not held to be liable because the IFPI had brought the case againstBaidu under outdated Chinese copyright law.

79 Owned by Alibaba.80 Go East Entertainment Co. Ltd. v Beijing Alibaba Information and

Technology Co. Ltd., Civ. No. (2007) 02627 Er Zhong Min Chu Zi (Beijing No. 2Intermediate People’s Court, 24 April 2007).

81 Article ‘China Court Rejects Yahoo China’s “Deep Linking” Appeal’,December 20, 2007, By Steve McClure, Tokyo, http://www.billboard.biz/bbbiz/content_display/industry/e3i3ed206b8d3c0733b23120a461b4581f2.

82 Phonefile v Startsiden (Oslo District court, Norway, 28 October 2003).

already discussed. The Court was asked to decide whether the Internet PortalABC Startsiden83 should be held liable for creating hyperlinks to file-sharingprograms, such as Kazaa.84 The defendant in this case provided links to file-sharing programs, which could be used to facilitate copyright infringement aswell as other, lawful purposes, rather than directly to infringing materials.Extending the distance of the linker and the infringement, in terms of the chainof events, makes it more difficult to establish liability on the part of the linker.ABC Startsiden essentially acts like a directory by categorizing different typesof services. The MP3 category presented links to file-sharing services. TheCourt considered ABC Startsiden’s potential indirect liability for providinghyperlinks to web sites where programs allowing users to produce illegalcopies of protected works can be downloaded. Relying on the principles ofsecondary liability, the discussion in the case focused on whether there wassufficient causation to make the defendant an accessory to the copyrightinfringements committed by end-users. Although the Court found the exis-tence of a causal link between the links created by the defendant and theinfringements committed by the end-users, this causal link was not sufficientto comply with the Norwegian legal theories on liability. As the user would beobliged to take steps subsequent to accessing the home page of the file-shar-ing service, the links were held to be of little importance in the chain of causa-tion and no causal link was established. The Court noted that the file-sharingprograms would still be available if ABC Startsiden were to remove its hyper-links and that such programs can also be used for non infringing purposes.85

Hosting of Links to Illicit Content

Scientology v XS4al1 In the Dutch case Scientology v XS4al1, the issue ofhosting was addressed as well as linking. The Church of Scientology objectedto its copyrighted writings (certain texts of Ron Hubbard, the founder of theChurch of Scientology) being disseminated on the Internet and sued 22 host-ing service providers (including XS4all and Dataweb), in addition to the oper-ator of the site at issue, Mrs. Karin Spaink, who was primarily responsible forthe online posting. As well as seeking an order enjoining the defendants fromhosting its copyright material, the Church also asked the Court (as a preven-tive measure) to prohibit them from linking to other sites containing the copy-righted texts.


83 http://www.startsiden.no84 http://www.Kazaa.com85 See Article ‘Decision on Linking to File Sharing Services’, Jon Bing,

Norwegian Research Centre for Computers & Law, Faculty of Law, University of Oslo,http://merlin.obs.coe.int/iris/2004/2/article33.en.html.

At first instance, the Court of The Hague ordered the defendants to desistfrom hosting or establishing links to the Church’s texts, holding that the defen-dants were liable to the extent that they knew about the presence of the textsor of links on their servers, that the correct nature of the Church’s notificationcould not reasonably be doubted, and that they did not act expeditiously toremove the texts or links in question.86 The Court’s reasoning concerning theliability of the defendants, including the provider of the link and the ISPs host-ing the page with the link, was based on the general obligation of ‘due care’(‘zorvuldigheid’) contained in the Dutch Civil Code.

On appeal, the Court of The Hague rightly considered that the freedom ofexpression protected by Art. 10 of the ECHR (see above) would be dispropor-tionately restricted by such an injunction and thus reversed the first instancedecision.87 This is clearly a case where copyright is (mis)used in order tounduly limit the freedom to disseminate opinions that are particularly impor-tant to bring to the attention of the public. At length, the Court of Appeal’sdecision retraces the attempts of the Church of Scientology to restrict thepublic debate on the legitimacy of the Church and concludes that the claimagainst the publication of such protected documents, including through links,would not be a measure ‘necessary in a democratic society’ to protect ‘theright of others’, in this case the copyright held by the Church.88

IFPI v Skynet A further case involving IFPI had to do exclusively with thequestion of hosting hyperlinks.89 The Belgian branch of IFPI issued a claimagainst a Belgian access provider, Skynet, for the presence of hyperlinks onsome of its customers’ sites leading to MP3 files that IFPI claimed wereinfringing. IFPI had not notified the operators of the sites containing theallegedly illegal MP3 files, nor their hosts, nor Skynet’s customers who hadestablished the links to the sites, but had directly addressed its requests to


86 Church of Spiritual Technology/Dataweb B.V., Rb. The Hague, 9 June 1999,available in Dutch at http://www.xs4all.nl/~kspaink/cos/verd2ned.html. See alsoComputerrecht, 1999/4, p. 200, note P.B., Hugenholtz; B.I.E., 1999, p. 458, note A.Quaedvlieg.

87 Court of Appeal, The Hague, 4 September 2003, A&M, 2004.1, pp. 44. Onthis decision, see G. Gathem and A. Strowel, Droit d’auteur versus liberté d’expressionet responsabilité des fournisseurs de service sur l’Internet, A&M, 2004.1, pp. 50–52.

88 On the balance of copyright and freedom of expression, see A. Strowel and F.Tulkens, ‘Freedom of Expression and Copyright under Civil Law: Of Balance,Adaptation and Access’, Copyright and Free Speech, J. Griffiths and U. Suthersanen(ed), Oxford University Press, 2005, pp. 287–313; A. Strowel and Fr Tulkens, Droitd’auteur et liberté d’expression. Regards francophones, d’Europe et d’ailleurs,Larcier, 2006, p.161.

89 See also the discussion on Universal Music Pty. Ltd. v Cooper infra.

Skynet. Skynet, upon being asked to withdraw the links, had removed all ofthem from its servers, though not within time limits satisfactory to IFPI, whothus sought injunctive relief from the Court.

In his decision of 2 November 1999, the president of the Brussels Court ofCommerce concluded that the hosting of links leading to copyrighted materi-als could trigger Skynet’s liability if there were no reasonable grounds todoubt the correctness of IFPI’s notification.90 The president decided that therewere no such grounds in this case, and thus enjoined Skynet from ‘knowinglystoring information on its server, giving rise to unlawful distribution of musi-cal recordings’.91

The Brussels Court of Appeal adopted the opposite solution. In its ruling of13 February 2001, the Court first addressed the issue of the liability of the linkprovider and stated quite clearly that links to MP3 files:

[…] are a kind of key which, by clicking on it, allows reproductions of musicalrecordings made without the rightful parties’ consent to be downloaded, copied anddistributed. The creation of links to such unlawful files, when one knows or shouldknow that they are illegal, constitutes an unlawful act.92

As regards the liability of the ISP, the Court of Appeal – duly informed aboutthe relevant provisions of the US Digital Millennium Copyright Act and otherexisting foreign law and case law, and of the EC 2001/31 ElectronicCommerce Directive – decided to first develop its own standards for a noticeand take down procedure, and then to verify the application of such standardsto the facts of the case, in order to decide whether Skynet had acted contraryto fair trade practices.

The notice and take-down procedure developed by the Court of Appealimplies that when IFPI informs Skynet of the existence of hyperlinks on sitesthat refer to illegal musical recordings posted on other sites, Skynet shouldremove these links or prevent access to them, provided the following condi-tions are met and the procedure indicated below is followed:

• IFPI must first, via an e-mail to the address indicated by Skynet, informSkynet of these links, identify them by stating the page(s) on the site ofSkynet’s customer on which these links appear along with the musicalrecordings that form part of IFPI’s repertoire and can be downloadedfrom the linked sites, and must expressly require that these links beremoved or made inaccessible;


90 IFPI v Belgacom Skynet, Court of Commerce, Brussels, 2 November 1999.91 Id. (authors’ translation).92 IFPI v Belgacom Skynet, Court of Appeals, Brussels, 13 February 2001.

• Such notification similarly should expressly include the facts thatwould, prima facie, lead a reasonable ISP to assume that the files towhich the links refer are illegal;

• Skynet must remove these links or make them inaccessible within threeworking days following receipt of a notification meeting the aboveconditions, unless it can provide, within the same period, proof that themusical recordings to which the challenged links refer are legal;

• When submitting the request that links be removed or rendered inac-cessible, IFPI must expressly agree to support the responsibility for theremoval or rendering inaccessible of the links indicated by them andmust guarantee Skynet against any claims from customers from whoseweb sites the indicated links have been removed or rendered inaccessi-ble on IFPI’s initiative, should it subsequently appear that this was doneunlawfully.

The facts of the case proved that IFPI had not met these standards on severalpoints. IFPI’s notifications did not contain all the requested information andtherefore, had not made it prima facie apparent to a reasonable ISP that themusical recordings to which the links referred were illegal.

Search Engine with Links to Illicit Content

Perfect 10. v Google93 and SAIF v Google Perfect 10. v Google is a complexUS case. It began in the District Court of the Central District of California in2006 when Perfect 10 Inc., publisher of an adult magazine and subscriptionweb site featuring photographs of nude models, sued Google for copyrightinfringement. Specifically, Perfect 10 sought a preliminary injunction againstthe search engine to stop generating and distributing thumbnails of Perfect 10images in Google Image Search, and also to bar Google from indexing andlinking third-party sites illegally displaying full-size images of Perfect 10photos. The District Court deemed the thumbnails infringing but not the links.The Ninth Circuit Court of Appeals, on 16 May 2007, vacated the preliminaryinjunction on the thumbnail ruling and remanded the contributory infringe-ment claim for links to the infringing third parties back to the district court.The Ninth Circuit found the thumbnail images themselves covered by the ‘fairuse’ doctrine due to its transformative nature (as mentioned above in Kelly v


93 Perfect 10 Inc. v Amazon.com Inc, 508 F.3d 1146 (9th Cir. 2007). BecauseGoogle was a named defendant in this important case, and Google’s service was moreextensively discussed by the Court than Amazon.com’s, we will refer to this case asPerfect 10 v Google.

Arriba). It then focused on secondary liability regarding Google’s ‘inline link-ing’ to full size image.

To best understand how the courts addressed this issue, some backgroundon the technology is necessary.

Google’s thumbnail images serve as a link for the user to obtain more infor-mation about the image. Clicking on a thumbnail image opens a new page thatuses the framing method to display two separate windows on the user’s screen,one containing information from the Google web page, including the thumb-nail image and text, and the other incorporating the full-size image from thethird-party web site through the technique called ‘inline’. Google does notstore the (sometimes illicit) full-size images appearing in one window on theuser’s screen but only provides HTML instructions directing a user’s browserto access a third-party web site. Because ‘providing these HTML instructionsis not equivalent to showing a copy’, the Ninth Circuit held that Google cannotbe directly liable for the appearance of the full-size images.

The Court considered both vicarious and contributory infringement basedon the direct liability of the third-party web sites displaying the full-sizeimages, not of the Google image search users.

In order to find Google vicariously liable, the test defined by the Groksterdecision of the Supreme Court must be applied: one ‘infringes vicariously byprofiting from direct infringement while declining to exercise a right to stopor limit it’.94 This means it would be necessary to establish that Googleenjoyed a direct financial benefit from the infringing activities of third-partyweb sites that host and serve infringing copies of Perfect 10 photographs,and that Google declined to exercise the right and ability to supervise orcontrol the infringing activity. According to the District Court and the NinthCircuit, Google is not deemed to have sufficient control over or authority tostop or limit the infringing conduct of third parties to satisfy the secondnecessary prong of the test for vicarious liability. Thus, Perfect 10 wasdeemed unlikely to succeed in proving that Google can be held vicariouslyliable.

In order to establish contributory infringement, Google had to know theinfringing activity and induce, cause or materially contribute to that activity.To ascertain Google’s knowledge of the infringing activities, the District Courthad considered the copyright notices placed on the original images, Google’smonitoring activities and the notices of infringement that were sent fromPerfect 10 to Google; however, it held that, alone, the inclusion of a copyrightnotice on the image is not sufficient for Google to ascertain whether theimages were subject to copyright, and thus, Google’s established monitoring


94 MGM Studios Inc. v Grokster Ltd. 545 US 913 (2005) at 930.

activities were not deemed to confer knowledge on it. The District Court didnot reach a decision as to whether the notices of infringement sent fromPerfect 10 to Google were sufficient to establish knowledge.

Assuming Google had knowledge of infringing materials available on itssystem, the District Court, when discussing material contribution, relied on thefact that Google does not offer the facility for its users to download the imagesin the same way that Napster enabled its users to download music files.95

Focusing on the indirect liability in relation to the web sites offering the full-size images to which Google’s system links (not in relation to the users ofGoogle’s system), the Court of Appeal dismissed the opinion of the DistrictCourt that had concluded that Google did not materially contribute to infring-ing conduct because it did not undertake any substantial promotional or adver-tising efforts to encourage visits to the infringing web sites. For the Court ofAppeal, such analysis is not correct as Google substantially assists web sitesin distributing their infringing copies to a worldwide market. While the Courtof Appeal held that Google’s activities do not meet the Grokster ‘inducementtest’96 because it has not promoted the use of its search engine specifically toinfringe copyrights, the Court did state that contributory liability could still beimposed under common law principles, which establish that intent can beimputed: ‘an actor may be contributorily liable for intentionally encouragingdirect infringement if the actor knowingly takes steps that are substantiallycertain to result in such direct infringement’.97

For Google to be held contributorily liable, it must be established thatGoogle had knowledge that infringing Perfect 10 images were available usingits search engine, that it could take simple measures to prevent further damageto Perfect 10’s works and failed to do so. Because the District Court did notresolve the factual issues over the adequacy of the Perfect 10’s notices and theavailability of reasonable and feasible means for Google to refrain fromproviding access to the infringing images, the Court of Appeal remanded thisclaim back to it. Thus, there is no definite ruling in Perfect 10 v Google onwhether Google is in fact contributorily liable for inline linking to full-sizeinfringing images. The Court of Appeal rightly emphasizes that secondaryliability in such a linking case requires ‘fact-intensive enquiries’.

As for other issues considered in the present chapter, a case similar toPerfect 10 has found its way in continental Europe, allowing a comparison ofviews held in very different jurisdictions. A collective society (SAIF) repre-senting well-known French photographers (Doisneau, Cartier-Bresson, etc.)


95 Perfect 10 v Google Inc, 416 F Supp 2d 828 (CD Cal, 2006) at 855.96 See contribution of J. Ginsburg Chapter 4 in the current volume.97 Perfect 10, Inc. v Amazom.com, Inc., No. 06-55405 (9th Cir., 16 May 2007)

at 54.

filed a case against Google France and Google Inc. for offering, throughGoogle Image Search, links to illicit reproductions of those authors’ pictures.On 20 May 2008, the Paris First Instance Court quite surprisingly ruled thatUS law should apply because Google’s servers are located in California wherethe allegedly infringing acts also take place. The French court only focused onthe alleged direct infringement for reproducing thumbnails on Google’s pages.Applying the US fair use provision, the court considered that Google’s use wasnon-commercial and did not negatively affect the exploitation of thephotographs, and was thus deemed fair.98 Strangely, the issue of indirect copy-right liability for linking to illicit content was not addressed by the Paris court.

Links to Circumventing Devices

The ‘DeCSS’ cases As the Internet is a global and extremely rapid means ofcommunication, it is very difficult to prevent the disclosure and subsequentdissemination of information on the network. The DVD Copy ControlAssociation Inc. and the American film industry attempted to stop the onlinecommunication of information concerning the possibility of decrypting aprogram that is used to protect copyrighted films. Before marketing their filmson DVDs, the major US film producers took steps to ensure that they could notbe copied. The Content Scrambling System (‘CSS’) program was developedto prevent copying of films on DVDs. For obvious reasons of controlling theuse of this technology, film producers gave a single company (the DVD CopyControl Association, Inc.) the right to license its corresponding decryptiontechnology. No CSS license had been granted to enable DVDs to be played onLinux operating systems. However, a Norwegian Linux user, Jon Johansen,succeeded in reverse engineering the CSS code and created a program called‘DeCSS’, enabling users to circumvent the CSS encryption system and thuscopy DVDs. In record time, the DeCSS was disclosed on a profusion of websites with an equally impressive number of web sites linking to them. In turn,the US film industry brought a number of lawsuits against operators of sitescontaining the DeCSS.

In one of these suits, DVD Copy Control Ass’n v McLaughlin, the filmproducers requested an injunction prohibiting the defendant not only fromdisclosing the DeCSS on his own site, but also from linking to sites contain-ing the DeCSS. In its order granting a preliminary injunction, a California trialcourt ordered the defendant to remove the DeCSS from his site but did not


98 SAIF v Google France and Google Inc., TGI Paris, 20 May 2008, accessibleon www.legalis.net.

deprive him of his freedom to establish links, claiming that such an injunctionagainst linking would be ‘overbroad and burdensome’.99 The court added:

Links to other web sites are the mainstay of the Internet and indispensable to itsconvenient access to the vast world of information. A web site owner simply cannotbe held responsible for all the content of the sites to which it provides links. Further,an order prohibiting linking to web sites with prohibited information is not neces-sary since the Court has enjoined the posting of the information in first instance.100

In our view, the last consideration is mistaken: as long as the DeCSS contin-ues to be available on the Internet, whether on the defendant’s site or on otherlinked sites, it will be in the plaintiff’s interest to apply for an injunctionagainst linking. The real issue is rather the legal basis on which the plaintiffcan seek an injunction against linking. Under US law, the Digital MillenniumCopyright Act offers such a basis, as will be examined in the following case.

In the case on the merits, Universal City Studios v Reimerdes, the filmindustry sought a permanent injunction against the defendants’ posting of theDeCSS on their web sites and against the linking to other web sites containingthe DeCSS.101 The discussion regarding posting of the DeCSS (which wasdeclared to violate the DMCA) will not be further addressed here. More inter-estingly for this contribution, the court concluded that by linking to other websites containing DeCSS, the defendants unlawfully ‘offered, provided, orotherwise trafficked’ in the described technology, and thus equally violated theDMCA.102

As regards the First Amendment defence, the court recognized the possible‘chilling effect’ to the freedom of expression of a rule permitting liability for,or injunction against, hyperlinks (especially where the linked site would alsooffer content other than the DeCSS), and therefore, defined the standards to beapplied in deciding whether the linking at stake should be declared illegal. Thestandards developed by the court are as follows:

[T]here may be no injunction against, nor liability for, linking to a site containingcircumvention technology, the offering of which is unlawful under the DMCA,


99 DVD Copy Control Ass’n v McLaughlin, No. CV 786804, 2000 WL 48512(Cal. Super. Ct. 21 January 2000).

100 Id. at *4.101 At first, the plaintiffs obtained, on 20 January 2000, a preliminary injunction,

but only as regards the posting by defendants of DeCSS on their web sites (not for link-ing). Universal Studios, Inc. v Reimerdes, 82 F. Supp. 2d 211 (S.D.N.Y. 2000).Subsequent motions to expand the preliminary injunction to linking and to vacate itwere consolidated with the trial on the merits.

102 Universal City Studios, Inc. v Reimerdes, 111 F Supp. 2d 294, 325 (S.D.N.Y.2000).

absent clear and convincing evidence that those responsible for the link (a) know atthe relevant time that the offending material is on the linked-to site, (b) know thatit is circumvention technology that may not lawfully be offered, and (c) create ormaintain the link for the purpose of disseminating that technology.103

Knowledge of the infringing material on the linked-to site and the intentionalplacement of the link to disseminate the infringing material were thereforesufficient to conclude that the provider of the link was liable. In Universal CityStudios v Reimerdes, the defendants had, upon issuance of the preliminaryinjunction enjoining them not to post the DeCSS on their web site, entered intoa state of what they had themselves termed ‘electronic civil disobedience’ byattempting to defeat the preliminary injunction by linking users to other websites still offering the DeCSS, and by encouraging other sites that had not beenenjoined from posting the DeCSS to offer the DeCSS on their web sites. Basedon such eloquent evidence of the defendants’ intention, the court concludedthat the abovementioned conditions for issuing a linking injunction were met.

The same outcome for linking to an anti-circumvention device has beenreached in Germany (see below), although the legal grounds completely differ.

BMG Records v Heise Zeitschriften Verlag In this German case, whichechoes the above DeCSS cases in the US, a respected online news servicespecialized in information technology had reported on a software (‘AnyDVD’)advertised for download from a third party’s web site. The software washosted on a server based in Antigua and was able to circumvent the encodingtools used to protect sound and video recording. Various German producers ofrecordings sued the online news service because its report contained a link tothe web page from which the circumventing software could be downloaded.From reading the linked-to page, it was also clear that this software – whoseability to crack anti-copying devices used for DVDs was praised – was alsoprohibited in European countries. At the time this online report was made (inJanuary 2005), Germany’s 1965 Copyright Act had already implemented theEuropean rules prohibiting the trafficking of circumventing devices, includingpromotion and advertisement to prevent such devices (Art. 6 of the EC2001/29 Copyright in the Information Society Directive). At first instance andlater on appeal, the Munich Courts held that the defendant was liable forassisting the infringement resulting from the traffic of circumventing technol-ogy.104 The form of contributory infringement applied by the Appellate Courtis known as ‘disturbance liability’ (Störerhaftung). It relies on a provision of


103 Id. at 341.104 OLG München, 29 U 2887/05, 28 July 2005 (21 O 3220/05 Landgericht

München I).

the German Civil Code (Article 830) dealing with torts, in particular acts ofcontributory tortfeasors. On this basis, liability exists where an act, even in theabsence of intention or negligence, results in the violation of a legallyconferred benefit. In such a case, only an injunction can be granted, notdamages.105 The plaintiffs obtained an injunction against the online service forassisting copyright infringement through the online publication and link.

As in other cases involving linking, the endorsement of the illicit contentreferred to is decisive in establishing liability. In various decisions, theGerman Supreme Federal Court (Bundesgerichshof) has emphasized thathyperlinking is not subject to specific rules for online liability (such as theGerman rules of the ‘Telemedien’ law implementing the provisions of the EC2000/31 Electronic Commerce Directive on intermediaries), but to the generalrules on liability. Applying these rules in two cases106 involving linking toillicit material (such as pornographic content), the Supreme Federal Courtruled that the person who, through linking to the information provided by thirdparties, makes this information ‘his own’ is liable in the same way the providerof this information is. This ‘appropriation’ (endorsement or sponsoring) ofthird-party content exists when the link provider consciously and intentionallysubscribes to the linked-to content.

SUMMARY

Secondary liability for copyright infringement has been widely debated inrelation to P2P file sharing. It also plays an important role with regard tohyperlinking. In general, ‘to link’ does not raise any copyright liability.However, in certain circumstances, the links between web pages may prove‘dangerous’. Caution is necessary if ‘good relations’ are to be maintained.Hence the motto some commentators have proposed: ‘Think before you link’.

The level of cautiousness needed and the liability risk firstly depend on thetype of linking:

• Use of protected pointers. It is certainly necessary to think first beforelinking if, instead of an Internet address, the pointer takes the form of animage or other feature that may enjoy copyright protection in its ownright. The use of headlines as pointers has in particular been condemned


105 See G. Westkamp (2006), ‘Hyperlinks, circumvention technology andcontributory infringement – a precarious tale from German jurisprudence’, JIPLP, Vol.1, p. 309.

106 BGH 1 April 2004 – I ZR 317/01 (Schöner Wetten) and BGH 18 October2007 – 1 ZR 102/05.

in various cases. In those cases, direct copyright liability is involved asa copy is made by the linking site. Intermediaries such as search enginesoffering value-added services (for example, Google.News) have some-times been held directly liable for using copyrighted elements as point-ers or for adding and editing protected content on top of the simple links(for example, extracts or titles of press articles).

• Deep links. Caution is also called for if the link is made to a page that isnot the homepage or front page of a site, as in the case of deep link,particularly, if the linked-to site is a commercial site supported byadvertising revenues and if the advertising on the linked site is beingreplaced by that of the linking site. However, most deep links will nottrigger any liability. The liability of the linking site will not be based oncopyright infringement but would rely on other grounds of action suchas unfair competition.

• Embedded links. Lastly, embedded links, which give the impression thatthe content of another site is being appropriated, should be avoided,especially in civil law countries where the tort of unfair competition andthe protection of the author’s moral interests will offer firm grounds forlegal action.

Secondary liability for copyright infringement is mainly applied in the casesinvolving linking to illicit content (and to MP3 files in particular). Theoutcome of those cases largely depends on the specific facts and the behaviourof the link providers. Indirect liability for linking to illicit content relies onvarious legal grounds depending on the legal issues of the national law system:in common law countries, the notion of ‘authorization’ incorporated in theCopyright Acts has been used to oppose this form of linking; in the US, thecase law doctrines of contributory infringement and liability for inducementare playing a role; in civil law countries, the general principle of due care, forexample the rule of Article 1382 of the French and Belgian Civil Codes, willcontinue to be applied in various ways in the event of linking to illicitcontent.107

Secondary liability claims have not only been raised against the providersof links, but also against intermediaries who host links to illicit content oragainst other intermediaries who knowingly facilitate the identification of, andaccess to, illicit files. In the case of intermediaries who offer services directlyconnected to the presence of illicit content (for example, a (MP3) dedicatedsearch tool), the active role in facilitating the infringements and the require-ment of knowledge are easier to establish than in the case of hosting providers


107 See also the contribution of A. Dixon Chapter 1 in the present volume.

who offer a general purpose service and might legitimately ignore the presenceof illicit content. However, even for hosting providers, who at first sight playa role remote from the directly infringing acts (the illicit uploading), somedirect knowledge might result from adequate notifications, and this triggers anobligation to react expeditiously as in other cases involving the hosting ofillicit content.

The review of the case law on those aspects has demonstrated the multipleissues raised by hyperlinking – but a certain convergence as well in the waycourts have tackled those issues – although they are operating in very differ-ent legal contexts and with the help of various legal tools often deeply rootedin common law.


4. Copyright control v compensation: the prospects for exclusive rights after Grokster and Kazaa

Jane C. Ginsburg

INTRODUCTION

On the last day of the 2004 Term, the US Supreme Court announced its much-awaited decision in MGM Studios, Inc. v Grokster Ltd.1 Songwriters, recordproducers and motion picture producers alleged that two popular file-‘sharing’networks, Grokster and Streamcast (dba Morpheus) should be held liable forfacilitating the commission of massive amounts of copyright infringement bythe end-users who employed the defendants’ peer-to-peer software to copy andredistribute films and sound recordings to each others’ hard drives. The Courtreversed the Ninth Circuit’s grant of summary judgment for defendants, hold-ing that the technology entrepreneurs could be held liable for ‘actively induc-ing’ the end-users’ acts of infringement. As consumer-wielded digital mediaincreasingly supplant the traditional intermediaries who made copyrightedworks available to the public (and who traditionally were the targets of copy-right enforcement), courts have struggled to balance meaningful protection forworks of authorship against the progress of technological innovation. Forsome observers, the weakening of copyright control is the necessary price topay for technological advancement.2 For others, authors’ ability to maintainexclusive rights remains a cornerstone of any copyright system as it adapts toaccommodate new modes of exploitation.3

110

1 125 S. Ct. 2764 (2005).2 See, e.g., id at 2793 (Breyer, J. concurring); Lawrence Lessig (2004), Free

Culture: How Big Media Uses technology and the Law to Lock Down Culture andControl Creativity.

3 See, e.g., Stacey Dogan (2003), ‘Code Versus the Common Law’, 2 Journalof Telecommunications & High Technology Law 73; Jane C. Ginsburg (2001),‘Copyright and Control over New Technologies of Dissemination’, 101 Colum. L. Rev1613.

Grokster is the latest in a series of US decisions to address that balance byarticulating the liability of an enterprise that does not itself commit copyrightinfringement, but instead makes it possible for others to infringe. To appreci-ate the Supreme Court’s analysis, it helps to set the case in both domestic andinternational doctrinal context. Because unauthorized P2P distribution ofcopyrighted works extends well beyond the US, copyright owners havepursued legal actions in other countries, including the Netherlands4 andAustralia.5 Thus, I will also consider another common law jurisdiction’s analy-sis of the liability of those who provide goods or services to facilitate infringe-ment. I will conclude with some (perhaps foolhardy) forecasts for thepost-Grokster future of copyright enforcement.

SECONDARY LIABILITY IN THE US

Copyright infringement is a tort.6 So is knowingly enabling or inciting anotherto infringe. Decisions dating back several decades recognize that one whosupplies the means to infringe, and knows of the use to which the means willbe put (or turns a blind eye), can be held liable for contributory infringement.7

In the early cases, however, the relationship between the supplier and the userof the means was sufficiently close that there could be little doubt of either theknowledge or the nexus between the means and the infringement.8 For exam-ple, in the ‘make-a-tape’ case, a record shop rented sound recordings tocustomers who would also purchase blank tape and then use a recordingmachine on the store premises to copy the rented recording onto the blanktape.9 The storeowner’s knowledge of the likely use of the blank tape waspatent. When, however, the infringement-facilitating device leaves the direct

Copyright control v compensation 111

4 Vereniging Buma, Stichting Stemra v Kazaa BV, Supreme Court of theNetherlands (Hoge Raad), decision of 19 December 2003, AN7253 Case no.:C02/186HR.

5 Universal Music Australia Pty Ltd v Sharman License Holdings Ltd. [2005]FCA 1242.

6 See Latman and Tager (1963), ‘Innocent Infringement of Copyright’, 2Studies on Copyright 139 (Fisher Mem. Ed.).

7 See generally Goldstein on Copyright § 8.1 (3d edn 2005) (citing cases).8 See id. (advancing the general proposition that ‘the closer the defendant’s acts

are to the infringing activity, the stronger will be the inference that the defendant knewof the activity’).

9 Elektra Records Co. v Gem Electronic Distributors, Inc., 360 F. Supp. 821(E.D.N.Y. 1973). See also RCA Records v A-Fast Systems, Inc., 594 F.Supp. 335(SDNY 1984) (defendant’s employees used ‘Rezound’ cassette recorder to make copiesof sound recordings on customers’ request).

control of the facilitator so that it no longer knows in fact what customers areup to, contributory infringement may be more difficult to establish. That, inessence, was the copyright owners’ problem in the ‘Betamax’ case.10 Sony, thedistributor of the video tape recorder, could well anticipate that consumerswould use the record function to copy protected programs, but once the devicewas out of the manufacturer’s hands, it could neither know precisely what theend-users were doing, nor limit their use to permissible copying.

In absolving Sony of liability, the US Supreme Court added a gloss to theprior standard: one who distributes an infringement-enabling device will notbe liable for the ensuing infringements if the device is ‘widely used for non-infringing purposes. Indeed it need merely be capable of substantial non-infringing use.’11 This is so even though the distributor was aware that at leastsome of the use to which the device would be put would be infringing. Thecourt then held that time shifting (recording for subsequent viewing and thenerasure) of free broadcast television programs was a fair use.12 On the recordin the case, the ‘primary use’ of the VTR was for time shifting.13 A use held tobe non-infringing thus predominated, and certainly met the ‘substantial’ stan-dard.

Cases subsequent to Sony endeavoured to apply the ‘substantial non-infringing use’ standard. But the standard did not again come into play withrespect to mass-market means of copying until the Napster controversy.14

There, an online peer-to-peer music ‘sharing’ service maintained a centraldatabase that allowed end-users to find other users currently online and tocopy MP3 files from their hard drives. Napster evoked the Sony standard,asserting that not all the files were copied without authorization. Napster alsoasserted that P2P architecture could, in the future, spawn more non-infringinguses. The Ninth Circuit agreed that Sony required taking into account theservice’s capacity for future lawful use, but nonetheless held Napster acontributory infringer. In yet another gloss on the standard of liability, theNapster court held that courts should inquire into non-infringing uses whenthe distributor of the device lacks actual knowledge of and control overspecific infringements. Where, however, it is possible to segregate and prevent


10 Sony Corp. of America v Universal City Studios, 464 US 417 (1984).11 464 US at 442.12 Id at 447–56.13 Id at 493 (Blackmun J., dissenting).14 A&M Records, Inc. v Napster, Inc., 239 F.3d 1004 (9th Cir. 2001). But see

Vault v Quaid Software, 874 F.2d 255 (5th Cir. 1988) (distributor of program designedto circumvent software copyright protection held not liable for contributory infringe-ment because program could be used for non-infringing purpose of making back upcopies authorized by 17 USC § 117).

infringing uses, it is not appropriate to exculpate the entire system by virtue ofits capacity for non-infringing uses. In other words, the consequences to tech-nology of enforcing copyright rules were different in Sony and in Napster.Sony presented the court with an all-or-nothing challenge: either the devicewould be enjoined, frustrating legitimate uses; or no liability would attach,despite the infringements the device enabled. In Napster, by contrast, theservice could disable infringing uses by blocking access to listings ofprotected files, while allowing permissible uses to continue. Napster thustransformed Sony into an inquiry into knowledge of and ability to preventspecific infringements.15

Of course, Napster set out the instructions for its own demise: if Napsterwas liable because it could maintain control over its users’ activities, then thenext device or service would make sure to make it difficult if not impossiblefor the service to exercise control.16 So were born Kazaa, and its US licensees,Grokster and Morpheus. Unlike Napster, these services had no centralizeddirectory: they dispersed information about file location across computer‘nodes’ around the world. Users could find each other, but the servicesdisclaimed the ability to prevent infringements as they were occurring.Although it recognized that Grokster and Morpheus had intentionally builttheir systems to defeat copyright enforcement, the Ninth Circuit held that,without the ability to prevent specific infringements, the services could not beliable.17 The court scarcely considered whether the services enabled substan-tial non-infringing use; it acknowledged that 90 per cent of the uses wereinfringing, but observed in footnote that 10 per cent could be substantial,particularly when the 10 per cent referenced many millions of uses. (That theother 90 per cent would be even more extensive seems not to have troubled thecourt.)18

A unanimous US Supreme Court reversed. It held that the Ninth Circuit hadmisapplied the Sony standard, or, more accurately, that the Ninth Circuit didnot appreciate that the Sony standard does not even come into play when thedefendant is ‘actively inducing’ copyright infringement. That is, a devicemight well be capable of substantial non-infringing uses. But if it can beshown that the distributor intended users to employ the device in order toinfringe copyright, then the distributor will be liable as a matter of basic tort


15 For a criticism of the Ninth Circuit’s approach, see Goldstein, supra, at §8.1.2.

16 See, e.g., Fred Von Lohmann (2001), ‘IAAL: Peer-to-Peer File Sharing andCopyright Law after Napster’ available at http://www.gtamarketing.com/P2Panalyst/VonLohmann-article.html.

17 MGM Studios, Inc. v Grokster Ltd., 380 F.3d 1154, 1165-66 (9th Cir. 2004),rev’d., 125 S. Ct. 2764 (2005).

18 380 F.3d at 1162 n. 10.

principles. In this light, Sony was a case articulating a standard for assessingliability when it cannot be shown that the device distributor sought to fosterinfringement. But if the defendant has actively induced infringement, there isno need to revisit the Sony standard in order to clarify what ‘substantial non-infringing use’ actually means.

The Court set out three elements probative of intent to induce infringement:(1) the defendant promoted the infringement-enabling virtues of its device; (2)the defendant failed to filter out infringing uses; (3) the defendant’s businessplan depended on a high volume of infringement. In Grokster’s case, all threeelements were easily demonstrated. Grokster had sent out emails extolling P2Pcopying, and it had ‘aim[ed] to satisfy a known source of demand for copy-right infringement, the market comprising former Napster users.’19 Groksternot only declined to devise its own filters; it blocked third-party filters. AndGrokster’s business plan depended on advertising, whose rates would turn onthe volume of users encountering the ads. The more Grokster could attractvisitors, the better for its business, and the prospect of free music attracts morevisitors than paid music. Taken together, these factors demonstrated a clearintention to foster infringement. As the Court declared: ‘The unlawful objec-tive is unmistakable.’20

Of course, inducement to infringe is actionable only if infringements in factoccur. Because the liability derives from primary infringing conduct, badintent must join with unlawful end-user acts. Thus, for example, distributing acopying device together with an exhortation to use the device to engage inmassive unauthorized copying does not give rise to liability if no one in factso uses it. In Grokster, however, end-user infringement was never in doubt;plaintiffs’ studies showed that 90 per cent of the works copied were copy-righted,21 and even the Ninth Circuit acknowledged that the ‘CopyrightOwners assert, without serious contest by the Software Distributors, that thevast majority of the files are exchanged illegally in violation of copyrightlaw.’22 The Supreme Court thus could exclaim: ‘The probable scope of copy-right infringement is staggering.’23

Having ruled that bad intent, if proved, sufficed to find liability forinfringements thus induced, the full Court declined to analyse what the stan-dard for contributory infringement would be when intent to foster infringe-


19 125 S.Ct. at 2781. See also Sverker Högberg (2006), ‘The Search for Intent-Based Doctrines of Secondary Liability in Copyright Law’, 106 Colum. L. Rev 909(discussing the post-Grokster dangers of targeting a ‘risky demographic’).

20 125 S.Ct. at 2782.21 Id. at 2772, 2778.22 380 F.3d at 1160.23 125 S.Ct. at 2772.

ment cannot be shown. The full court opinion provided some indication of thatstandard, however, when it stressed that certain of the three indicia of intentcould not, in isolation, establish inducement because basing liability solely onthe defendant’s business plan, or solely on the design of its product, would beinconsistent with Sony.24 But the Court assiduously declined to offer furtherguidance on the meaning of ‘substantial non-infringing use.’

Two concurring opinions, each signed by three justices, ventured onto thatterrain, advancing opposing analyses. For Justice Ginsburg, Sony requires thatcopyright protection be ‘effective – not merely symbolic.’25 Where the over-whelming use of the device is to infringe, to reject the distributor’s liabilitywould reduce copyright protection to the merely symbolic. The three justicesalso stressed factual differences between the facts of Sony and the activities ofGrokster and Streamcast. In Sony, the ‘time shifting’ that the Court deemedfair use was in fact the primary use of the video tape recorder at the time. Bycontrast, the copies the Grokster and Streamcast users made were not ruled fairuses, and the defendants made no showing of significant actual non-infringinguses. The concurring opinion chided the Ninth Circuit for its failure to ‘distin-guish between uses of Grokster’s and StreamCast’s software products (whichthis case is about) and uses of peer-to-peer technology generally (which thiscase is not about).’26 The evidence of non-infringing use presented by thedefendants, and credited by the Ninth Circuit, addressed the general benefitsof P2P, and not the particular application of P2P by Grokster and Streamcast.

Failure to distinguish between peer-to-peer in general and the exploitationmade of that technology by Grokster and Streamcast characterizes the otherconcurring opinion by Justice Breyer, signed as well by Justices Stevens andO’Connor, who had authored or signed the majority opinion in Sony. Thisopinion urged a broad interpretation of Sony, in order to provide security totechnology entrepreneurs against attacks by copyright owners allegedlyharmed by the distribution of devices that enable end-users to make unautho-rised uses of works of authorship. For these justices, the phrase ‘capable ofsubstantial non-infringing use’ must be understood to excuse the distributor ofa device whose lawful use is as low as 10 per cent, especially if non-infring-ing uses might develop in the future. Moreover, this concurrence stressed, thepotential for non-infringing use should be assessed with respect to devices ‘ofthis type,’ and not specifically in relation to the defendant’s device. JusticeBreyer thus could assert that it did not matter that Grokster ‘may not want todevelop these other non-infringing uses. But Sony’s standard seeks to protect,


24 Id. at 2781–82 and n. 12.25 Id. at 2783 (Ginsburg, J., concurring). Chief Justice Rehnquist and Justice

Kennedy joined this concurrence.26 Id. at 2786.

not the Groksters of this world (which in any event may well be liable undertoday’s holding), but the development of technology more generally.’27

Justice Breyer emphasized the benefits of the Sony doctrine (as understoodby the three concurring Justices): it is ‘strongly technology protecting;’ it isforward looking; and it does not require judges to evaluate the technology atissue.28 The opinion does not hide its bias in favour of technological develop-ment. In weighing the disadvantages inflicted on technology against theadvantages to authors and copyright owners that would flow from a stricterinterpretation of Sony (such as that pressed by the Ginsburg concurrence),Justice Breyer’s opinion does not allude to the interests of creativity, but to‘greater revenue security for copyright holders.’29 In this perspective, the onlycreators who count appear to be the technology innovators, here confrontedwith the anonymous and oppressive financial interests of the ‘copyright hold-ers.’ The opinion adds insult to injury by declaring that, in any event, ‘the lawdisfavors equating the two different kinds of gain (copyright) and loss (tech-nology); rather, it leans in favor of protecting technology.’30 This strikingaffirmation is based neither on the text of 1976 Copyright Act nor in theConstitution. Its principal foundation is the Sony decision, which, as we haveseen, can be understood in several different ways.31

But perhaps the disagreement over the Sony standard will not in fact mattervery much because the Grokster inducement standard may displace inquiriesinto the substantiality of non-infringing uses. Speculation is hazardous, butone might predict that, where a device facilitates infringement on a massivescale, its distributor will likely be found to have intended that result. Wherethe infringement the device enables is relatively modest in scale, inducementwill not be found; however, neither will the Sony threshold for liability be heldto have been crossed, whatever its height. In other words, ‘inducement’ and


27 Id. at 2790 (Breyer, J., concurring).28 Id. at 2791–92.29 Id. at 2793.30 Id.31 Justice Breyer’s declaration proposes a starker opposition than the Court’s

earlier dictum in Twentieth Century Music Corp. v Aiken, 422 US 151, 156 (1975)(‘The limited scope of the copyright holder’s statutory monopoly . . . reflects a balanceof competing claims upon the public interest: Creative work is to be encouraged andrewarded, but private motivation must ultimately serve the cause of promoting broadpublic availability of literature, music, and the other arts. . . . When technologicalchange has rendered its literal terms ambiguous, the Copyright Act must be construedin light of this basic purpose.’). The Aiken decision did not, however, concern newtechnologies; the question there was whether a small commercial establishment’s play-ing of radio programming by means of a home style-receiving device was a ‘perfor-mance’ of the broadcast.

‘substantial non-infringing use’ will become legal conclusions, separating theSony (good technology) sheep from the Grokster (evil entrepreneur) goats.

The following analysis supports the speculation. Suppose in each of theensuing cases, the device made available to the public enables a very highvolume of infringement.

Case 1. The distributor, culture-wants-to-be-free.com, promotes the infringement-faciltating features of its device or service and does not filter out infringing uses.But it has no business plan because it does not seek revenues; rather it wishes toliberate content from copyright’s clutches.

Although one of the three Grokster elements is missing, this still seems like astraightforward case of ‘inducement,’ and, assuming the device is used asintended, liability would be found.

Case 2. The distributor, culture-for-me.com, neither promotes infringement, norfilters infringements out; its business plan requires a high volume of traffic to thesite. Bloggers on the unaffiliated culture-wants-to-be-free.com site identify andpromote the infringement-facilitating features of culture-for-me.com’s device orservice.

The most probative Grokster element, advertising, seems absent here. Ifculture-for-me.com merely benefits from, but is not in league with, culture-wants-to-be-free.com, then the question becomes whether failure to filter, plusan infringement-dependent business plan, suffice to establish inducement.Grokster tells us that each of these two in isolation will not, but neither didGrokster explicitly require all three elements to be present before inducementcould be found. Moreover, as the Australian Federal Court in its Kazaa caserecognized,32 the distributor of a device or service is not likely to filter if to doso would reduce its economic benefit. In other words, the two go hand in hand.Other Grokster elements prove interdependent as well: a site that does filter isnot likely to advertise an ability to facilitate infringement if it has in facthampered that capacity. A site that does filter, moreover, will probably not beengendering massive infringement.

To determine whether advertising is the sine qua non of inducement, onemight consider whether once it is shown that the distributor promoted infring-ing uses of the device, it necessarily follows that inducement will be found.The Sony case itself suggests not. There was considerable evidence that couldhave led to characterizing the Sony Corp. of America as an ’inducer.’ Sonypublished advertisements encouraging consumers to build libraries of


32 Universal Music Australia Pty Ltd v Sharman License Holdings Ltd. [2005]FCA 1242.

recorded television programming.33 One advertisement depicted a televisionset next to a large bookcase fully stocked with hand-labelled boxes of Betamaxtapes, and congratulated consumers on their creation of a home tape library ofprograms. But, despite this evidence of incitement to unauthorized copying –and retention – of protected works, the Court did not find Sony liable. As Prof.Litman’s study also shows, a bare majority of the Court was unlikely to findSony liable on any theory, convinced as Justice Stevens and his allies were thatthe primary consumer conduct should not be deemed wrongful. But recall thatmost of that conduct was in connection with an activity – time-shifting – thatthe majority held non-infringing. In other words, the Sony Corp. may havebeen proposing that consumers engage in an activity – librarying – whosecharacterization as a fair use was very doubtful, but most consumers in factused the Betamax for a purpose the court deemed ‘fair.’ This suggests thatincitement unaccompanied by substantial infringements does not give rise toliability.

If promotion standing alone does not necessarily amount to inducement,perhaps it is also true that non-filtering together with infringement-dependentbusiness plans can so add up. With or without advertising, the economy of theoperation depends on infringement. If that is so, it is difficult to see how theentrepreneur could not have intended to foster infringement. And Grokstertells us that where there is (realized) intent, there will be liability.

Does this prove too much? Grokster may instruct that technology entrepre-neurs should not draw their start-up capital from other people’s copyrights.34

Pressing copyright owners into service as the principal (uncompensated)investors in a new technology seems rather problematic. But what if there areother investors? That is, let’s assume that lawful uses account for some portionof the device or service’s appeal, so that the service could start up thanks to therevenues derived from the lawful uses, although input from other people’scopyrights may remain necessary to profitability. The Grokster goats are thosetechnologists whose business plans would not exist but for the infringements


33 See Jessica Litman (2005), ‘The Story of Sony Corp. of America v UniversalCity Studios: Mary Poppins Meets the Boston Strangler’, in Jane Ginsburg andRochelle Dreyfuss eds. Intellectual Property Stories 358, pp. 360–61 .

34 See Oral Argument Transcript at 36, MGM Studios, Inc. v Grokster Ltd, 125S. Ct. 2764 (2005)(No. 04-480), available at http://www.supremecourtus.gov/oral_arguments/argument_transcripts/04-480.pdf.

JUSTICE KENNEDY: – but what you have – what you want to do is to say thatunlawfully expropriated property can be used by the owner of the instrumentality aspart of the startup capital for his product.MR. TARANTO: I – well –JUSTICE KENNEDY: And I – just from an economic standpoint and a legal stand-point, which sounds wrong to me.

they enable. What barnyard characterization fits those whose business plans,albeit copyright-parasitic, contemplate mixing infringing and non-infringingsources of revenue? If we take Grokster’s treatment of the role of intent liter-ally, then the partial foundation of the business plan (and the concomitantdevice design) on non-infringing uses should not matter; the entrepreneur stillintends to foster some infringement. Liability, however, may turn on howmuch infringement. For we have posited that Grokster will supply the rulewhen the actual or potential volume of infringement is ‘staggering’. Short ofthat (but how much short of that remains uncertain), the Sony standard reap-pears, with (as we have posited) the result that the challenged technology willbe deemed lawful.35

If this prediction is incorrect, then we can expect further development ofthe Sony standard for exculpatory non-infringing use; in the absence of intentto induce infringement, will even trivial non-infringing use suffice to insulatethe technology entrepreneur so long as the technology in the abstract is capa-ble of future non-infringing use? Or will any device or service primarily usedto infringe run afoul of the standard? Perhaps a glance at the analysis in arelated jurisdiction might clarify the liability of infringement facilitators. Thedecision of the Federal Court of Australia in Universal v Sharman addressedthe liability of the Kazaa network for ‘authorizing’ infringement, in violationof the Australian Copyright Act.

‘AUTHORIZING’ INFRINGEMENT IN AUSTRALIA

The Federal Court in Australia issued its decision on 5 September 2005,following more than a year of evidence gathering in defendant SharmanNetworks’ computers. Perhaps learning its lesson from the ruling by theDutch Supreme Court rejecting liability on the ground that Buma-Stemra(the performing and mechanical rights society of the Netherlands) hadfailed to demonstrate that Kazaa (which had been located in theNetherlands before its move to Sydney and Vanuatu) was able to control theinfringing activities of its customers,36 the copyright owners obtained an


35 If the sheep are to be divided from the goats based on volume of infringement,this poses challenges for the timing of any lawsuit. If suit is brought too soon, therecord on actual use may not be sufficiently established. But if copyright owners waitto see how the device or service is used in fact, it may become difficult to dislodge;‘fair use’ may reduce to a synonym for fait accompli.

36 Vereniging Buma, Stichting Stemra v Kazaa BV, Supreme Court of theNetherlands (Hoge Raad), decision of 19 December 2003, AN7253 Case no.:C02/186HR.

‘Anton Piller order’37 authorizing pre-trial discovery of Sharman’s comput-ers. For over a year, the right holders monitored every transaction and everyemail transiting through the Sharman servers. This enabled them to establishan extensive record concerning both the measures that could be taken tocontrol users, and Sharman’s deliberate relinquishing of that control regardingits principal P2P service.

Unlike the US, where liability for facilitating infringement is grounded inthe common law,38 the Copyright Act of Australia (as well as of the UK39 andNZ40) makes ‘authorization’ of infringement a direct violation of the statute.Subsection (1) of s 101 of the 1968 Australian Copyright Act provides that acopyright:

is infringed by a person who, not being the owner of the copyright, and without thelicence of the owner of the copyright, does in Australia, or authorizes the doing inAustralia of, any act comprised in the copyright.

Subsection (1A), added in 2000, details the elements of ‘authorization’. Acourt is to take into account:

(a) the extent (if any) of the person’s power to prevent the doing of the actconcerned;(b) the nature of any relationship existing between the person and the person whodid the act concerned;(c) whether the person took any other reasonable steps to prevent or avoid the doingof the act, including whether the person complied with any relevant industry codesof practice.

The Federal Court ruled that the statute did not require that the defendant infact be able to prevent the infringement; the statutory language ‘(if any)’suggested the possibility that the extent of the power might be nil.41 Thatwould be the case where, for example, a defendant deliberately disabled itselffrom any ability to prevent the infringing uses it unleashed. Thus, the court


37 See Anton Piller KG v Manufacturing Processes Ltd [1976] Ch 55 (CA);[1976] 1 All ER 779; [1976] 2 WLR 162. An Anton Piller order, used primarily incopyright and patent infringement cases, is a court order, obtained ex parte, allowing aplaintiff to search a defendant’s premises without prior warning. A plaintiff obtains anAnton Piller order to prevent an alleged infringer from destroying or hiding incrimi-nating evidence.

38 Although in both Grokster and Sony the court analogized to § 271 of thePatent Act, which codifies contributory infringement.

39 Copyright, Designs and Patents Act 1988 s. 16(2).40 Copyright Act 1994 s. 16(1)(i).41 Universal v Sharman, supra at 360.

placed particular emphasis on the third element, focusing on the reasonablesteps the defendant could have taken to avoid infringement.42 On that score,the record of the defendant’s calculated inactivity spoke starkly. As the courtsummarized its findings:

(i) despite the fact that the Kazaa website contains warnings against the sharing ofcopyright files, and an end user licence agreement under which users are made toagree not to infringe copyright, it has long been obvious that those measures areineffective to prevent, or even substantially to curtail, copyright infringements byusers. The respondents have long known that the Kazaa system is widely used forthe sharing of copyright files;(ii) there are technical measures . . . that would enable the respondents to curtail –although probably not totally to prevent – the sharing of copyright files. The respon-dents have not taken any action to implement those measures. It would be againsttheir financial interest to do so. It is in the respondents’ financial interest tomaximise, not to minimise, music file sharing. Advertising provides the bulk of therevenue earned by the Kazaa system, which revenue is shared between SharmanNetworks and Altnet;(iii) far from taking steps that are likely effectively to curtail copyright file-sharing,Sharman Networks and Altnet have included on the Kazaa website exhortations tousers to increase their file-sharing and a webpage headed ‘Join the Revolution’ thatcriticizes record companies for opposing peer-to-peer file-sharing. They also spon-sored a ‘Kazaa Revolution’ campaign attacking the record companies. The revolu-tionary material does not expressly advocate the sharing of copyright files.However, to a young audience, and it seems that Kazaa users are predominantlyyoung people, the effect of this webpage would be to encourage visitors to think it‘cool’ to defy the record companies by ignoring copyright constraints.43

The Kazaa decision’s resemblance to Grokster’s three-point analysis is strik-ing. Like the US Supreme Court, the Australian Federal Court addressed thedefendant’s promotion of the infringement-facilitating features of its service toa ‘risky demographic’44 of likely infringers; the defendant’s deliberate failureto filter out infringing content; and its infringement-dependent business plan.The Australian court also noted the pretextual nature of such copyright-protec-tive measures as Kazaa had taken (wink-and-nod website warnings not tocommit infringement). Despite the similarity of the respective courts’


42 Id at 328, 330.43 Court’s summary; see also at 184 (‘I do not doubt that some people use Kazaa

only in a non-infringing way. However, it seems unlikely that non-infringing useswould sustain the enormous Kazaa traffic claimed by the respondents. The explanationof that volume of traffic must be a more populist use.’), 403–15 (legal conclusionsconcerning ‘authorization’).

44 I have borrowed this phrase from Sverker Högberg (2006), Note, ‘DoctrinalProblems in the Judicial Expansion of Secondary Copyright Liability’, 106 Colum. L.Rev 909.

approaches, however, the prospects of finding liability for enabling infringe-ment may be greater in Australia than in the US, principally because there isno precedent in Australia equivalent to Sony; the UK and Australian casesaddressing recording devices and media rejected ‘authorisation’ liability basedon lack of control over the users’ acts, not on the non infringing uses to whichthe recorders could be put.45

As a result, it is possible that, in the future, facilitators of online infringe-ments may be more vulnerable in Australia than in the US. In the US, if badintent is not shown (or not inferred from the scale of the enabled infringe-ments), the prospect of non-infringing uses (albeit in still-undefined propor-tion) may relieve the technology entrepreneur of liability for contributoryinfringement. This may be true even where the entrepreneur relinquishes theability to control end-user conduct, at least where that relinquishment is notprobative of intent to induce. After Kazaa, by contrast, an entrepreneur whodeliberately foregoes control that it could have exercised had it designed itsservice differently may well be found to have authorized the ensuing infringe-ments. Whether the contrast is more theoretical than real may turn on whetherthere are bona fide reasons to decline to undertake measures to prevent or limitinfringements. If there are not, the entrepreneur is likely to be held an inducerin the US and an authoriser in Australia. If there are, the Sony standard mayprotect the entrepreneur in the US; it is possible that an Australian court wouldrequire a more persuasive showing that the bona fide explanation in factsupplied the entrepreneur’s reasons for declining to avoid infringements.

The possible difference in outcome poses some fascinating private interna-tional law consequences. Copyright law is generally territorial: liability in agiven State arises out of wrongful acts occurring or impacting in that State.Unexcused copying in the US violates US copyright law, and unexcused copy-ing in Australia violates Australian copyright law. Unexcused communicationto the US public violates US law, and unexcused communication to theAustralian public violates Australian law. But, unexcused communicationfrom Australia to the public outside Australia also appears to violate Australianlaw.46 This suggests that a technology entrepreneur who makes it possible forAustralians to communicate works to the public outside Australia without the


45 See, e.g., CBS Songs Ltd v Amstrad Consumer Electronics plc [1988] 1 AC1013 (H.L.) (multiple-headed tape recorder); WEA International Inc v HanimexCorporation Ltd (1987) 10 IPR 349 (blank tape); Australian Tape ManufacturersAssociation Ltd v Commonwealth of Australia (1993) 176 CLR 480 (High Court Aus.)(blank tape).

46 See Copyright Act of 1968 (Aus), as amended, s. 10 (‘to the public means tothe public within or outside Australia’).

right holders’ permission may be violating Australian law, even if the entre-preneur would not be liable under the law of the recipients’ countries.47

CONCLUSION

The Grokster and Australian Kazaa decisions illustrate the adaptation ofgeneral principles to problems spawned by new technologies. Even thoughKazaa applies a statutory text, the reasoning draws on broader pre-statutorycase law, and seems largely consistent with the US Supreme Court’s federalcommon law analysis in Grokster. The two decisions may also have takensome of the wind out of the sails of proposals to substitute a P2P levy schemefor authors’ exclusive rights.48 At least to the extent those proposals werepropelled by an énergie du désespoir at copyright’s apparent inability toconfront the latest technological challenge, an effective compensation rightseemed more appealing than a hollow exclusive right. But if, as more recentdecisions suggest, copyright can rein in the intermediaries who enableinfringement for their own profit, then the climate may prove conducive tolicensing P2P exploitations. The goal, after all, is not to extirpate new modesof exploitation, but to bring them within the zone of exclusive rights so thatauthors may avail themselves of technological advances for the benefit of bothconsumers and copyright owners.


47 For extensive analysis of the international consequences of the Kazaa andGrokster analyses, see Graeme W. Austin (2006), ‘Importing Kazaa–ExportingGrokster’, Santa Clara Computer & High Technology Journal, Vol. 22, p. 577.

48 For examples of these proposals, see Jessica Litman (2004), ‘Sharing andStealing’, 26 COMM/ENT 1; Neil W. Netanel (2003), ‘Impose a Noncommercial UseLevy to Allow Free Peer-to-Peer File Sharing’, 17 Harv J. L. & Tech. 1.

Decisions subsequent to Grokster and Kazaa in other countries have also heldagainst the facilitating intermediary. See A. Strowel and P.Y. Thoumsin (2005), ‘LeP2P: un problème pressant en attente d’une réponse législative?’, Propriétés intel-lectuelles, No. 17, pp. 428–434, citing developments in Taiwan, ‘Kuro ConvictionThreatens P2P’, 10 September 2005.

5. Global networks and domestic laws: some private international law issues arising from Australian and USliability theories

Graeme W. Austin

INTRODUCTION

‘[S]ervices that employ peer-to-peer technology create vast, global networks ofcopyright infringement’,1 observed the United States Register of Copyrights in arecent Congressional hearing on copyright law. While the networks are global,the law applicable to P2P networks remains tethered within domestic borders.Even so, the application of the law may have significant extraterritorial effects.

This chapter explores the international character of the emerging law onP2P networks in two common law jurisdictions: Australia and the UnitedStates. P2P networks are ‘global’ in many respects. Users of P2P products andservices are present in many different jurisdictions. Technology entrepreneursand their business partners are often geographically dispersed, and businessstructures can be ‘split’ to leverage advantages provided by different nationallegal systems. And the digital content, whose ‘sharing’ is facilitated by theseproducts and services, regularly traverses back and forth across internationalborders. The global character of P2P networks makes it helpful to considersome of the private international law issues that may be raised by liabilitytheories that are emerging in the P2P context.

The discussion in this chapter focuses on three recent cases: two from theFederal Court of Australia, the 2005 decision in Universal Music Australia PtyLtd v Sharman License Holdings Ltd,2 and the 2006 decision of the Full

124

1 ‘Protecting Innovation and Art While Preventing Piracy: Hearing on s 2560,The Intentional Inducement of Copyright Infringement Act of 2004, Before theSubcommittee on the Judiciary’, 109th Cong (2004) (statement of Hon MarybethPeters, Register of Copyrights).

2 Universal Music Australia Pty Ltd v Sharman License Holdings Ltd (2005)220 ALR 1 [Kazaa].

Federal Court in Cooper v Universal Music Australia Pty Ltd,3 and the famousdecision of the United States Supreme Court in Metro-Goldwyn-MayerStudios Inc v Grokster.4 The second section of this chapter introduces theliability theories developed in the Australian cases and then discusses recentlyenacted Australian legislation that allows courts to apply Australian law tocopyright material that reaches a ‘public’ outside its borders. It also exploresother possibilities for extraterritorial application of relevant liability theoriesarising under Australian law.

The third section explores the opportunities for applying the ‘inducement’theory of copyright infringement that was developed by the US SupremeCourt in Grokster to conduct occurring in foreign jurisdictions. Copyrightowners may have welcomed the new ‘inducement’ theory announced by theGrokster court.5 Yet litigants may soon be embroiled in the task of determin-ing how the theory might apply to conduct that occurs abroad. This sectionfirst identifies the potential, within the increasingly fluid doctrine on the terri-toriality of intellectual property rights,6 for application of the Grokster induce-ment theory to activity occurring in foreign jurisdictions. It then considers theissue of de facto exporting of indirect liability theories, and examines BreyerJ’s concurring opinion in Grokster to explain this concept. The fourth sectionoffers a brief exploration of the relevance of public international law to thedevelopment of a sound private international law regime for the P2P context.

P2P LIABILITY IN AUSTRALIAN LAW

Authorising Copyright Infringement: Kazaa and Cooper

The Australian Copyright Act of 1968 (Cth) provides that copyrightinfringement occurs when a defendant ‘does … or authorizes the doing …of any act comprised in the copyright’.7 The Copyright Act 1968 lists a

Global networks and domestic laws 125

3 Cooper v Universal Music Australia Pty Ltd v Sharman License Holdings Ltd[2006] FCAC 187 (Full Federal Court of Australia) [Cooper].

4 Metro-Goldwyn-Mayer Studios Inc v Grokster Ltd, 125 S Ct 2764 (2005)[Grokster].

5 The Grokster court adapted this theory from US patent law. The Patent Actnow codifies the inducement theory. See 35 USC § 271(b): ‘Whoever actively inducesinfringement of a patent shall be liable as an infringer’.

6 Quality King Distributors Inc v L’Anza Research International Inc, 523 US135 at 154 (1998) (Ginsburg J concurring) (describing copyright’s territoriality princi-ple as: ‘Copyright protection is territorial. The rights granted by the United StatesCopyright Act extend no farther than the nation’s borders’ (quoting P. Goldstein (1998),Copyright, 2nd ed (Aspen Law and Business, New York).

7 Copyright Act 1968 (Cth) s. 101(1) (emphasis added).

number of non-exclusive factors that courts are required to take into accountwhen considering liability for authorising copyright infringement:

(a) the extent (if any) of the person’s power to prevent the doing of the actconcerned;(b) the nature of any relationship existing between the person and the person whodid the act concerned;(c) whether the person took any other reasonable steps to prevent or avoid the doingof the act, including whether the person complied with any relevant industry codesof practice.8

These factors build on9 judicial analyses in a long line of Australian andCommonwealth cases that have considered the scope of the concept ofinfringement by ‘authorisation.’10 The statutory factors are not exhaustive,11

and they can be supplemented as the particular facts of cases demand.Significantly, the factors appear to provide for a finding of authorisation insituations in which the authorising defendant cannot control the end user, as isimplied by the use of the words ‘if any’ in the first factor.12

In some Commonwealth jurisdictions, the interpretation of ‘authorise’ inthe copyright infringement context had become fairly narrow. The House ofLords held in CBS Songs Ltd v Amstrad Consumer Electronics plc,13 a caseinvolving a dual audio cassette player, that ‘to authorise’ means ‘a grant, orpurported grant, which may be express or implied, of the right to do the actcomplained of’.14 This standard was meant to be narrower than an earlier testthat focused on whether the defendant ‘sanctions, approves, or countenances’infringement by another.15 Under this test, the purveyors of the tape deck werenot liable for copyright infringement.


8 Copyright Act 1968 (Cth) s. 101(1)(A).9 The explanatory memorandum accompanying the Bill that added these factors

took the view that the inclusion of the factors ‘essentially codifies’ the common lawdevelopment of the ‘authorization’ tort: Revised Explanatory Memorandum, CopyrightAmendment (Digital Agenda) Bill 2000 (Cth).

10 See generally Y. Gendreau (2001), ‘Authorization Revisited’, 48 Journal ofthe Copyright Society of the USA 341 (surveying history of the ‘authorisation’ conceptin Commonwealth jurisdictions).

11 See Universal Music Australia Pty Ltd v Cooper (2005) 150 FCR 1 at [81](Tamberlin J.) (noting that the factors are ‘not exhaustive and do not prevent the Courtfrom taking into account other factors, such as the respondent’s knowledge of thenature of the copyright infringement’.).

12 Kazaa (2005) 220 ALR 1 at 88–9.13 [1988] AC 1013.14 Ibid, at 1054.15 The broader test had been articulated by Atkin L.J., as he then was, in Falcon

v Famous Players Film Co [1926] 2 KB 474.

In Australia, the High Court maintained the broader test. It held inUniversity of New South Wales v Moorhouse16 that authorisation does notrequire the granting of express or active permission to infringe copyright.Under Moorhouse, the defendant will be liable for infringement if the defen-dant controls the means by which infringement takes place, makes that meansavailable for the use of persons who might use it to infringe, and is indifferentas to whether or not they do in fact infringe.17

In Kazaa, the Court tailored the Moorhouse authorisation principle to theP2P context. It emphasised that providers of software that enabled the P2Psystem to operate were not liable for copyright infringement merely becausethey provided facilities used to infringe the applicants’ copyrights.18

‘Something more’ was required. With respect to the Sharman defendants, theprincipal operators of the Kazaa system, the judge noted Sharman’s promotionof the P2P file-sharing facility,19 its exhortations to users to use the facility toshare files, and its promotion of the ‘Join the Revolution’ movement on itswebsite, a movement that, in the Court’s words, ‘is based on file-sharing, espe-cially of music, and which scorns the attitude of record and movie companiesin relation to their copyright works’.

The Court also paid close attention to the ability within the overall Kazaasystem to monitor search requests by Kazaa users. Sharman had been involvedin a joint enterprise with another firm, Altnet, with the intention of developinga business to distribute licensed content, which eventually would turn aprofit.20 From the user’s perspective, this meant that both unlicensed andlicensed copyright material, the latter accompanied by digital rights manage-ment information, were available on the Kazaa system. Licensed and unli-censed files were designated colours, ‘gold’ and ‘blue’ respectively. Altnet wasable to disseminate licensed material to users of the Kazaa software in part bymonitoring users’ ‘blue’ file searches. Search for ‘gold’ files was facilitated bya TopSearch index, which was regularly ‘pushed’ to the computers acting as


16 (1975) 133 CLR 1.17 Even in the United Kingdom, however, the narrower test has proven to be

quite flexible, and has been more liberally applied in cases in which courts have iden-tified a ‘joint venture’ between the supplier and the primary infringer that reveals acommon purpose that a product be used in an infringing way. H. Laddie, P. Prescott andM. Vitoria (2000), The Modern Law of Copyright and Designs, vol 2, 3rd edn,(Butterworths, London), p. 1176.

18 Kazaa (2005) 220 ALR 1 at 98.19 The Federal Court referred to a number of firms and one individual as the

‘Sharman’ defendants. Kazaa (2005) 220 ALR 1 at 11.20 Kazaa (2005) 220 ALR 1 at 33 (Wilcox J.). Altnet was also licensed to use the

‘Kazaa’ trademarks.

Kazaa supernodes.21 ‘Gold’ files were distributed by Altnet with metadata,regularly updated according to patterns of users’ searches, which facilitatedthe sales of these files. If a Kazaa subscriber’s ‘blue search’ search termsmatched the terms included in the ‘gold’ file metadata, Kazaa users wereoffered ‘gold’ files along with the results of the ‘blue’ file search.

The Court enjoined most of the Kazaa defendants from authorising users toreproduce and publicly distribute copyright protected works, and from enter-ing into a common design to ‘carry out, procure, or direct the said authorisa-tion’.22 This technical information about the interrelationship between theKazaa software and the Altnet search system also enabled the Federal Court tocraft a ruling that would have allowed the Kazaa system to operate, albeit, ona different commercial basis, while implementing protections for the appli-cants’ copyrights. The court’s formal orders warrant reproducing in full:

Continuation of the Kazaa Internet file-sharing system (including the provision ofsoftware programs to new users) shall not be regarded as a contravention of order 4if that system is first modified pursuant to a protocol, to be agreed between theinfringing respondents and the applicants or to be approved by the court, thatensures either of the following situations:

(i) that:(a) the software program received by all new users of the Kazaa file-sharing

system contains non-optional keyword filter technology that excludes from thedisplayed blue file search results all works identified (by titles, composers’ orperformers’ names or otherwise) in such lists of their copyright works as may beprovided, and periodically updated, by any of the applicants; and

(b) all future versions of the Kazaa file-sharing system contain the said non-optional keyword filter technology; and

(c) maximum pressure is placed on existing users, by the use of dialogue boxeson the Kazaa website, to upgrade their existing Kazaa software program to a newversion of the program containing the said non-optional keyword filter technology;or

(ii) that the TopSearch component of the Kazaa system will provide, in answerto a request for a work identified in any such list, search results that are limited tolicensed works and warnings against copyright infringement and that will excludeprovision of a copy of any such identified work.23

In 2006 in Cooper v Universal Music Australia,24 the Full Federal Court(which decides appeals from cases in the Federal Court) confirmed these basic


21 The system gave Altnet knowledge of the IP addresses of the Kazaa users.Ibid, at 36–7 (Wilcox J.).

22 The court also made formal declarations that such infringement had occurred.Ibid, at 6–8 (Wilcox J.).

23 Kazaa (2005) 220 ALR 1 at 7 (Wilcox J.).24 Cooper [2006] FCAFC 187.

rules on authorization. The principal defendant in Cooper operated a website(‘MP3s4FREE’) that listed user-generated hyperlinks to remote websites onwhich copies of copyright-protected musical works were loaded. Clicking onthe hyperlink caused copies of the sound recordings to be downloaded to abrowser’s computer. Confirming that the operation of the website itselfamounted to ‘authorisation’, one of the Justices drew the following analogy,which also underscores the ‘viral’ character of copyright infringement viadigital networks:

One person has a vial that contains active and highly infectious micro-organisms,which are ordinarily passed from human to human by the coughing of an infectedperson. He or she authorizes another person to break the vial in a crowded roomknowing that this will result in some people in the room becoming infected with themicro-organisms. Most people would, I think, regard the first person as havingauthorised the infection not only of those in the room, but also of the wider groupthereafter directly infected by them, notwithstanding that he or she had no power toprevent those who were in the room coughing.25

The Court concluded that the defendant had authorized copyright infringementby establishing and maintaining a website that ‘was structured so that when auser clicked on a link to a specific music file a copy of that file was transmit-ted directly to the user’s computer’.26 It was ‘immaterial’ that the website‘operated automatically in the sense that, although [defendant] could edit linkson the site, [defendant] did not control the usual way in which links wereadded to the site’.27 The ‘inexorable inference’ from the evidence was that ‘itwas the deliberate choice of [defendant] to establish his website in a way thatallowed automatic addition of hyperlinks’.28

In Kazaa, the Court did not distinguish between direct infringements or actsof authorisation that occurred in Australia and those that occurred outsideAustralia. The holding and remedy were only loosely tethered within territor-ial confines. For example, the modifications of the Kazaa system required bythe court were directed at the software ‘received by all new users of the Kazaafile-sharing system’. Similarly, all future versions of the Kazaa system were toinclude filter technology, and maximum pressure was to be placed on existingusers without limitation to those in Australia to upgrade to a system thatdeploys these filters. There was no apparent restriction on the location of theusers or to where new versions of the Kazaa system software were to bedistributed. The record did disclose that there was a significant volume of


25 Cooper [2006] FCAFC 187 [32].26 Cooper [2006] FCAFC 187 [42].27 Cooper [2006] FCAFC 187 [43].28 Cooper [2006] FCAFC 187 [43].

directly infringing activity occurring in Australia. Even so, there was nosuggestion that the court was specifically concerned about the territorial limitsof its holdings insofar as the acts of authorisation (as compared with the directacts that were authorised) were concerned.

In Cooper, however, the Full Federal Court did address the territorial scopeof the ‘authorisation’ tort. The Court noted that territorial restriction of copy-right infringement in Australia concerns the direct infringement of reproduc-tion and communication. This tracks the statutory definition of infringement,which imposes liability for copyright infringement on one who ‘does inAustralia, or authorizes the doing in Australia of, any act comprised in thecopyright’.29 Because the record in Cooper disclosed that vast numbers ofprimary acts of infringement occurred within Australia, the court was able toconclude that the elements of the ‘authorisation’ tort had been established.

Australian Copyright Law’s Extraterritorial Reach

Australian copyright law offers some expressly ‘extraterritorial’ approaches toenforcing the rights of copyright owners. As part of a package of reformsenacted in 2000, the Australian Parliament added a new right to copyrightowners’ bundle of rights: the right to ‘communicate’ a work to the public,including outside Australia. Communicating a work also includes the makingavailable of copyright protected works including, for instance, the uploadingof a work to a generally accessible website. Among other things it achieved,the Copyright Amendment (Digital Agenda) Act (2000) enacted the legislationnecessary for Australia to comply with the WCT.30 Article 8 of the WCTprovides:

[A]uthors of literary and artistic works shall enjoy the exclusive right of authoriz-ing any communication to the public of their works, by wire or wireless means,including the making available to the public of their works in such a way thatmembers of the public may access these works from a place and at a time individ-ually chosen by them.

Article 8 applies to the full bundle of rights of the copyright owner, and wasintended to pave over gaps in the rights to disseminate copyright protectedworks provided in the Berne Convention.31 The WCT is silent on the extra-


29 Copyright Act 1968 (Cth) s. 101 (emphasis added).30 World Intellectual Property Organization Copyright Treaty, 20 December

1996, 36 ILM 65 (1997).31 Berne Convention for the Protection of Literary and Artistic Works, 9

September 1886, as revised at Paris on 24 July 1971 and amended in 1979, S TreatyDoc No. 99-27, 99th Cong, 2d Sess 43 (1986) [Berne Convention]. Parties to the WCT

territorial reach of the communication right. As enacted into domesticAustralian law, nonetheless, the communication right has an express extrater-ritorial reach. According to Australian law, ‘to the public means to the publicwithin or outside Australia.’32 The official commentary on the legislationmade clear that the inclusion of this definition means that ‘Australian copy-right owners could control the communication from Australia of their materialdirected to overseas audiences’.33 The Australian law on the communicationright goes further than is required by the WCT in this aspect, and thus has thepotential to be exported to – and, in effect, imported into – every nation in theworld to which copyright protected material might be communicated withouta license. Moreover, the communication right does not appear to require proofthat the communication to users in foreign territories is itself infringingaccording to the laws of the countries where the communication is received.34

There are, however, some important limitations on the scope of the commu-nication right under Australian law. Consistent with the ‘Agreed statementsconcerning Article 8’ of the WCT, which carve out a safe harbour for the ‘mereprovision of physical facilities for enabling or making a communication’, theCopyright Act 1968 provides that a person, including an ISP,

who provides facilities for making, or facilitating the making of, a communicationis not taken to have authorised any infringement of copyright in a work merelybecause another person uses the facilities so provided to do something the right todo which is included in the copyright.35


were entitled to incorporate the treaty obligation into domestic law in their own way.The Australian Act applies the communication right broadly: ‘communicate meansmake available online or electronically transmit (whether over a path, or a combinationof paths provided by a material substance or otherwise) a work or other subject matter,including a performance or live performance within the meaning of this Act’.Copyright Act 1968 (Cth) s. 10. The accompanying World Intellectual PropertyOrganization Performances and Phonograms Treaty, 20 December 1996, 36 ILM 76(1997) has a more layered approach to the media to which the ‘communication’ rightis applied. See Agreed Statement Accompanying Article 15.

32 Copyright Act 1968 (Cth) s. 10 (emphasis added).33 Digital Agenda Copyright Amendments: Exposure Draft and Commentary,

Copyright Amendment (Digital Agenda) Bill at [28] (6 February 1999).34 There are parallels in US case law on the ‘predicate act’ theory, which makes

pecuniary relief available under US copyright law for foreign infringements facilitatedby the making of an unlicensed copy within the United States. In an early case recog-nising this principle in the context of allegations of unlicensed exploitation of a copy-right protected work in Canada, the Second Circuit imposed liability on the defendantin circumstances where the plaintiff had not established the content of the foreign law,observing ‘[t]he plaintiffs made no proof of foreign law, and we cannot say that theexhibition … abroad was a tort’. Sheldon v Metro-Goldwyn Pictures Corp, 106 F 2d 45at 52 (2nd Cir, 1939), affirmed on other grounds: 309 US 390 (1940).

35 Copyright Act 1968 (Cth) s. 39B.

The Australian Act thus appears to limit direct liability for unlicensed commu-nication by defining the person making the communication as ‘the personresponsible for determining the content of the communication’.36 One cannotbe held liable for communicating a work to the public merely by providing thefacilities by which a communication is made; nor can one be held liable unlessone is responsible for determining the content of the communication. Becauseusers generally determine the content of communications facilitated by P2Pnetworks, there may be significant obstacles to imposing liability on thoseresponsible for providing P2P products or services that directly communicatea work to the public.

But if the territorially confined ‘authorization’ tort is layered onto the‘communication’ concept, Australian law might offer copyright owners somequite powerful legal mechanisms capable of reaching many unlicensed foreigncommunications of copyright protected works. If the users of P2P services areconsidered responsible for the content of the communication by, for instance,making copyright protected works available for downloading by others (worksthey have at some stage selected themselves by downloading them from otherusers), they would appear to be primarily liable for all communications,domestic and foreign. If a party is liable for authorising those unlicensedcommunications, the indirect liability theory also has the potential to reachboth communications within Australia and those made to P2P users in foreignterritories. The leading English authority on authorisation, Abkco Music &Records Inc v Music Collection International Ltd,37 is consistent with thispoint. The English Court of Appeal held that a foreign firm that authorisedinfringement of copyright by primary acts within the United Kingdom wasliable for authorising infringement under the English copyright statute. If,under Australian law, the act of authorisation does not itself need to haveoccurred on Australian soil, a firm operating outside of Australia may, in somecircumstances, be found to have authorised communications that begin fromAustralia, even if the communications themselves are directed or made avail-able to users outside of Australia. Put another way, the Australian regimemight imply that, so long as there’s a ‘communicator’ located in Australia,Australian law can reach the conduct of, say, a British firm whose conduct canbe characterised as ‘authorizing’ infringing communications to the UnitedKingdom and every other country to which they are transmitted.38


36 Copyright Act 1968 (Cth) s. 22(6).37 [1995] RPC 657.38 Because the communication principle also includes ‘making available’ a

copyright work, it does not appear to be necessary for the work to reach anyone, so longas it is internationally accessible. However, at least in theory, remedies might be differ-ent where a work is actually downloaded by foreign users, as compared with mere‘exposure’ for download.

Outside of Australia there may yet be further extraterritorial possibilities. Insome jurisdictions, courts are willing to ascertain and apply foreign copyrightlaws. Some US appellate courts, for instance, have suggested that trial courtsshould determine and apply foreign intellectual property laws.39 And theEnglish Court of Appeal,40 at least within the ambit of the (then) BrusselsConvention, and probably further,41 has suggested that foreign copyright lawsare justiciable in domestic fora. Suppose such a court is seized of a dispute inwhich an Australian forum and application of Australian copyright law areappropriate and the allegations include unlicensed reproductions and distribu-tions in Australia in addition to unlicensed communications from Australia. Aforeign court that is willing to apply Australian copyright law at all will needto consider whether it is appropriate to apply those aspects of Australian lawthat have extraterritorial reach, as determined by the Australian parliament.This will involve the courts of one nation contending with the implications ofanother nation’s express rebuttal of the premise that domestic legislation hasno extraterritorial reach. The existing doctrine and statutory provisions appearto provide all the ingredients for this liability theory. It remains to be seen,however, if courts will be prepared to put the ingredients together.

GROKSTER ACROSS BORDERS

In Grokster, the Supreme Court of the United States famously held that thoseresponsible for managing a P2P network may be liable for copyright infringe-ment under the US Copyright Act on the basis that they ‘induced’ copyrightinfringement by others. The key factors that the Court considered relevant toa finding on ‘inducement’ were: (1) the defendants were aiming to satisfy a‘known source of demand for copyright infringement;’ (2) no filtering or othertools were deployed to diminish the infringing activity of users of the defen-dant’s software; and (3) the defendants’ business plan, including its source ofrevenue from advertising, depended on high volume use of the system, ‘whichthe record show[ed] is infringing.’42


39 See, e.g., Boosey & Hawkes Music Publishers, Ltd v Walt Disney Co, 145 F3d 481 (2nd Cir, 1998).

40 Pearce v Ove Arup Partnership Ltd [2000] Ch 403.41 The English Court of Appeal in Pearce considered the subject matter juris-

diction issue first under the Brussels Convention, and then according to generalcommon law principles, suggesting that the ruling has significance outside of theEuropean Union. See also Lucasfilm Ltd v Ainsworth [2008] EWHC 1878 (Ch) (31 July2008).

42 549 U.S. at 939–40.

The Grokster Court was not required to consider any international issues.Were such issues to arise, the Court’s statement of the holding would inviteanalysis of a number of questions. For example, are all uses ‘promoted’ by P2Pservices relevant to determining if the defendant induced copyright liability,including those that occur abroad? Would it matter if many of the formercustomers of an illegal service for which a defendant sought to substitute werealso located abroad? Would it be relevant if the advertisements that supporteddefendants’ business model were targeted only to US consumers?

On the facts of Grokster, these issues would likely have been regarded asmoot. Even if analysis of the factual matrix supporting the Grokster holdingwere confined to purely domestic activity, there would almost certainly beenough domestic infringing acts, in terms of the sheer volume of primaryinfringers and targeted advertising, to make concern with the foreign conductlargely redundant. In the foreseeable future, however, purveyors of softwaretools facilitating the creation and maintenance of P2P networks may becomemore nimble, with services targeted more sharply at niche markets, both interms of audience and content.43 It is possible that numbers and geographymay begin to have greater significance.

De jure Exporting of Intellectual Property Liability Theories

At first blush, extant US copyright doctrine appears to impede application ofUS copyright in cases where the primary infringers are located beyond theforum. In Subafilms Ltd v MGM-Pathe Communications Co,44 for example,the US Court of Appeals for the Ninth Circuit has held en banc that the ‘autho-rization’ tort did not constrain authorisation in the United States of actions inforeign territories, regardless of whether the acts would have constitutedinfringements if done within the United States. The Court of Appealsgrounded its analysis of the cross-border questions in the territoriality ofdomestic copyright law,45 a concept that the Supreme Court had endorsedearly in the 20th century.46 The corollary of the Ninth Circuit’s endorsementof the territoriality of copyright law is that the lex protectionis governs the


43 See, e.g., ‘Irish Software Designer to Create P2P Network Secured fromOfficial Monitoring’, 1 August 2005, available at http://newsfromrussia.com/science/2005/08/01/60884.html (reporting on announcement by software designer, Ian Clark,to create a new P2P network that would include only invited, trusted users).

44 24 F 3d 1088 (9th Cir, 1994).45 Ibid, at 1095–9.46 See United Dictionary Co v G & C Merriam Co, 208 US 260 (1908); Ferris

v Frohman, 223 US 424 (1912).

primary infringement aspect of the authorisation tort,47 a principle that theSecond Circuit has also endorsed in more recent case law.48

The Ninth Circuit did not rely solely on Supreme Court doctrine, however.It also acknowledged the connection between territoriality and the interna-tional copyright relations of the United States, reasoning that extraterritorialapplication of the US Copyright Act would cut across the territorial premise ofinternational copyright treaties.49 It considered that to accept that the USCopyright Act could apply to foreign activity would ‘disrupt Congress’sefforts to secure a more stable international intellectual property regime’.50

The court observed, ‘[e]xtraterritorial application of American law would becontrary to the sprit of the Berne Convention, and might offend other membernations by effectively displacing their law in circumstances in which previ-ously it was assumed to govern’.51 As I have suggested elsewhere,52 there maybe an important normative component to the respect for the territorial integrityof different nations’ intellectual property policies: extraterritorial applicationof intellectual property laws risks overriding domestic policy choices that mayalso be important to key aspects of domestic and social economic policy.53

If doctrine developed in the ‘authorization’ context is applicable tosecondary liability generally, this may lead to the conclusion that Grokster’sinducement principle should not be applied where the primary infringementsoccurred outside the United States. Though the lines between various forms ofdomestic infringement may be blurry, a point recognised by the Sony court,geopolitical lines are not: the territoriality principle should preclude applica-tion of US liability theories where the primary acts of infringement occurabroad.54


47 For a meticulous exploration of the limits of the principle of lex protectionisin copyright law, see Mireille von Eechoud (2003), Choice of Law in Copyright andRelated Rights: Alternatives to the Lex Protectionis (Kluwer Law International,London).

48 Itar-Tass Russian News Agency v Russian Kurier Inc, 153 F 3d 82 (2nd Cir,1998).

49 Subafilms Ltd v MGM-Pathe Communications Co, 24 F 3d 1088 at 1097–8(9th Cir, 1994).

50 Ibid, at 1097.51 Ibid.52 G.W. Austin (2002), ‘Valuing “Domestic Self-Determination” in International

Intellectual Property Jurisprudence’, 77 Chicago-Kent Law Review 1155.53 Ibid.54 Sony, 464 US 417 at 435 n. 17 (1984): ‘the lines between direct infringement,

contributory infringement and vicarious liability are not clearly drawn…’ quoting 480F Supp 429 at 457–8.

The Subafilms approach is not universally endorsed, however.55 JudgeWiseman of the US District Court for the Middle District of Tennessee madethe following well-known retort to Subafilms, reasoning that authorisationdoes not require a domestic act of primary infringement:

piracy has changed since the Barbary days. Today, the raider need not grab thebounty with his own hands; he need only transmit his go-ahead by wire or telefaxto start the presses in a distant land. Subafilms ignores this economic reality, and theeconomic incentives underpinning the Copyright Clause designed to encouragecreation of new works, and transforms infringement of the authorization right intoa requirement of domestic presence by a primary infringer. Under this view, a phonecall to Nebraska results in liability; the same phone call to France results in riches.In a global marketplace, it is literally a distinction without a difference.56

A district court in New Jersey has adopted a similar approach, reasoning thatWiseman J.’s analysis was more sensitive to the ‘modern age of telefaxes,Internet communication, and electronic mail systems’.57 The New Jersey courtsaw the authorisation tort as preventing infringement of copyright by an entity‘merely directing its foreign agent to do its “dirty work”.’58

Subafilms is now over a decade old, and its analysis arose from acompletely different context than P2P networks. It also predates the massivethreats to copyright owners’ interests posed by digitisation and the Internet, asdid the Supreme Court cases on which the Ninth Circuit drew. One can sensein the district courts’ analysis some frustration about domestic copyrightowners’ vulnerability to foreign piracy, which may be exacerbated by strictinsistence on territoriality. Courts in the leading copyright circuits distinguishSubafilms where a predicate act of infringement occurring within the UnitedStates facilitates infringement abroad.59 Rightly or wrongly, the predicate acttheory has the potential to be quite protective of domestic copyright owners’interests in foreign territories, even in cases in which liability under the copy-right laws of the relevant foreign state(s) has not been established.60


55 P. Koneru (1996), ‘The Right “to Authorize” in US Copyright Law: Questionsof Contributory Infringement and Extraterritoriality’, 37 IDEA – The Journal of Lawand Technology 87 (criticising the Ninth Circuit in Subafilms for inappropriately adopt-ing the requirement in contributory infringement that there be an infringing primaryact).

56 Curb v MCA Records Inc, 898 F Supp 586 at 595 (MD Tenn, 1995).57 Expediters International of Washington Inc v Direct Line Cargo Management

Services Inc, 995 F Supp 468 at 477 (DNJ, 1998).58 Ibid.59 See, e.g., Los Angeles News Service v Reuters Television International, Ltd,

149 F 3d 987 (9th Cir, 2005).60 Sheldon v Metro-Goldwyn Pictures Corp, 106 F 2d 45 (2nd Cir, 1939).

Moreover, because temporary digital storage is considered a legally cognis-able copy according to US copyright law, the predicate act theory has thepotential to catch a significant amount of foreign copying.61 Because P2Pnetworks are usually not geographically segregated, temporary copies of filesto ‘pass through’ local ‘nodes’ quite often. If a liability theory can catch anunauthorised copy that occurs in the United States, then it would seem to beconsistent with the predicate act theory for it too provides pecuniary relief forall the further foreign infringements that the ‘local’ copy facilitates.

Without definitive guidance from the Supreme Court, lower courts’ will-ingness to apply Grokster in cases that involve foreign conduct, and in whichlitigants have questioned the geographical scope of the liability theory at issue,will likely depend on how rigidly future courts view the territoriality principle.Arguably, application of the predicate act theory will very often be an affrontto a strict understanding of the territorial premise of the international copyrighttreaty regime, as much as extraterritorial application of the ‘authorization’tort.62 Further extension of the theory may be even more so.63 With this inmind, however, one should also question whether it is always contrary to thespirit of the Berne Convention to adapt liability theories to stem the tide ofmassive copyright infringement over international communications networks.

Before considering that question in detail, it may be helpful first to considerbriefly the rapidly evolving doctrine on the territorial reach of US patent andtrademark laws. This doctrine may shed some helpful light on US courts’ atti-tude towards the territoriality issue in intellectual property generally. In thepatent context, recent decisions from both the Federal Circuit and the SupremeCourt evince some hostility to plaintiffs who seek to use US fora to or invokeUS patent law police infringing activities in foreign territories. In a much-awaited 2007 decision, Voda v Cordis Corporation,64 the Court of Appeals forthe Federal Circuit declined to exercise jurisdiction over a plaintiff’s allega-tions of infringement of foreign patents. Though the decision was limited to aparticular species of US federal jurisdiction,65 the Federal Circuit held, over a


61 J.C. Ginsburg (1998), ‘The Private International Law of Copyright in an Eraof Technological Change’, 273 Recueil Des Cours 239 at 341.

62 G.W. Austin (1999), ‘Domestic Laws and Foreign Rights: Choice of Law inTransnational Copyright Infringement Litigation’, 23 Columbia-VLA Journal of Lawand the Arts 1.

63 Ginsburg, above n. 61, at 347.64 476 F.3d 887 (Fed.Cir. 2007).65 Technically, the holding in Voda was limited to ‘supplemental’ subject matter

jurisdiction arising under 28 USC §1367. In Baker-Bauman v Walker, 2007 WL1026436, a district judge in the Southern District of Ohio distinguished Voda in a caseinvolving diversity jurisdiction under 28 USC § 1332(a), but noting that such a casecould still be dismissed on forum non conveniens grounds.

strenuous dissent, that considerations of comity, judicial economy, conve-nience, fairness and other exceptional circumstances provided ‘compellingreasons’ to decline jurisdiction over the allegations of foreign patent infringe-ment. If this approach becomes generally applicable, it will be necessary forparties to litigate allegations of patent infringement occurring in a number ofdifferent territories seriatim – that is, in each of the different jurisdictions inwhich each national patent is alleged to have been infringed.

The US Supreme Court has recently been engaged with a related set ofquestions concerning the territorial scope of US patent law. In Microsoft vAT&T Corp.,66 an April 2007 decision, the Court held that the US Patent Actdid not apply to a situation in which a defendant sent computer software fromthe United States (either on a disk or by electronic transmission) to a foreignmanufacturer for installation on computers made and sold abroad. Generally,there is no infringement under the US Patent Act where a product is made andsold in another country. However, an exception enacted in 1984 applies wherea party ‘supplies…from the United States,’ for ‘combination’ abroad apatented invention’s ‘components’.67 In AT&T, the Court reasoned, in essence,that ‘copies’ of software supplied from the United States could qualify ascomponents, but that liability did not attach merely to supply of the program‘in the abstract’. Accordingly, supply of a single copy from the United Statesdid not qualify under the section. The copies that were loaded onto themachines manufactured abroad were not therefore supplied ‘from’ the UnitedStates; rather they were supplied from ‘places outside the United States’. TheCourt’s reasoning suggests that the 1984 amendment envisaged the supply of‘things;’ the ease of copying software did not make the supply of a single copythe supply of ‘components’ from the United States for the purposes of assem-bly abroad. In other words, because the copies ‘did not exist until they weregenerated by third parties outside the United States’, the statute did not apply.

In AT&T, the Court accompanied its statutory interpretation analysis with astatement about the propriety of extending the reach of US law to conduct inforeign territories. Any doubt about the statutory interpretation point, theCourt reasoned:

would be resolved by the presumption against extraterritoriality, on which we havealready touched. The presumption that United States law governs domestically butdoes not rule the world applies with particular force in patent law. The traditionalunderstanding that our patent law ‘operate[s] only domestically and d[oes] notextend to foreign activities’, is embedded in the Patent Act itself, which providesthat a patent confers exclusive rights in an invention within the United States.


66 127 S Ct 1746 (2007).67 35 USC § 271(f)(1).

[…]As a principle of general application, moreover, we have stated that courts should‘assume that legislators take account of the legitimate sovereign interests of othernations when they write American laws.’ Thus, the United States accuratelyconveyed in this case: ‘Foreign conduct is [generally] the domain of foreign law’,and in the area here involved, in particular, foreign law ‘may embody differentpolicy judgments about the relative rights of inventors, competitors, and the publicin patented inventions.’ Applied to this case, the presumption tugs strongly againstconstruction of [the statute] to encompass as a ‘component’ not only a physical copyof software, but also software’s intangible code, and to render ‘supplie [d] ... fromthe United States’ not only exported copies of software, but also duplicates madeabroad.68

A possible implication of the Court’s statement is that there may need to befairly clear statutory guidance before US intellectual property laws would beinterpreted as reaching conduct occurring in foreign territory.

In the trademark context, however, the Supreme Court has been far morereceptive to application of US trademark law to foreign conduct. The 1952decision in Steele v Bulova,69 involved a US resident’s marketing of ‘Bulova’branded watches in Mexico. The defendant had been the first to register themark in Mexico, but by the date of the Supreme Court’s decision, that regis-tration had been annulled in separate Mexican judicial proceedings. Arguably,this meant that the extraterritorial application of the Lanham Act presentedless of an affront to the foreign trademark laws and the decisions of the foreigntrademark officials who had registered the defendant’s trademark. The FifthCircuit, however, would have allowed the case to proceed, even where impo-sition of liability under US trademark law could have conflicted with rightsgranted by a foreign sovereign.70 While other circuits have adopted slightlydifferent responses to the application of the Lanham Act in cases of allegedinfringement of trademark rights in foreign territories,71 the general trend hasbeen toward increased flexibility and enhancing opportunities for US trade-mark law to be applied to conduct occurring in foreign territories.

Bulova is now over fifty years old, and the Supreme Court has not had theopportunity to reconsider the territorial scope of the Lanham Act in the light ofthe concerns articulated in 2007 in AT&T about the territorial confines of USstatutory law. As a general matter, the law on the extraterritorial application of


68 127 S Ct at 1758 (citations omitted).69 Steele v Bulova Watch Co, 344 US 280 (1952).70 Bulova Watch Co v Steele, 194 F 2d 567 (5th Cir, 1952).71 The leading case is Vanity Fair Mills, Inc v T Eaton Co, 234 F 2d 633 at 642

(2nd Cir, 1956). See also McBee v Delica, 417 F 3d 107 (2005); Wells Fargo v WellsFargo Express Co, 556 F 2d 406 at 428–9 (9th Cir, 1977); Star-Kist Foods, Inc v PJRhodes & Co, 769 F 2d 1393 (9th Cir, 1985).

US law, and on the related topic of the receptiveness of US courts to allega-tions of infringement that implicate foreign laws, appears to be pulling in anumber of different directions. In P2P cases, and indeed in any intellectualproperty case involving foreign conduct, parties on each side should considerwhether it may be advantageous to raise the issue of the location of any activ-ities that are relevant to the applicable liability theory.

De facto Export of Liability Theories

The doctrinal developments discussed immediately above all involve issues ofde jure applications of US intellectual property law, applications that directlyconfront the territoriality of domestic laws. In the networked environment,however, domestic laws do not necessarily have to be deliberately applied toforeign conduct to have effects in other jurisdictions. Justice Breyer’s concur-ring opinion in Grokster illustrates that there is also potential for de factoapplication of US copyright law.

Justice Breyer joined the Court’s unanimous opinion holding that induce-ment of copyright infringement was a viable liability theory for the P2Pcontext. If the inducement theory were not available on the facts, however,Justice Breyer, and two Justices who joined his opinion, O’Connor andStevens JJ, would have upheld the granting of summary judgment based on thetest articulated in the famous decision in Sony Corp of America v UniversalStudios Inc72 in favour of the Grokster defendants. Sony provides a ‘safeharbour’ for those who, without more, market products that are capable of usesthat infringe copyrights as well as substantial non-infringing uses. JusticesBreyer disagreed with Justice Ginsburg, who authored another concurringopinion, as to the evidence required to establish whether a product compliedwith the Sony standard for purposes of summary judgment. These Justices alsodisagreed about how to characterise the volume of non-infringing uses that theSony safe harbour requires, a question that the Sony court did not directlyaddress. Justice Breyer suggested that a product would fall outside of the Sonystandard if it ‘will be used almost exclusively to infringe copyrights’.73 JusticeGinsburg and the two justices who joined her opinion, Rehnquist CJ andKennedy J, cited cases indicating that lower courts have required ‘substantial’and ‘predominant’ non-infringing uses to enable a defendant to qualify.74 Onthis view, the relative amounts of infringing and non-infringing conduct maybe more important for the application of the Sony standard.


72 464 US 417 (1984).73 Ibid, at 442.74 Grokster, 125 S Ct 2764 at 2791 (2005).

Justice Breyer’s opinion emphasised the ‘balancing’ implicit in the Sonytest, between facilitating the development of new technology and providingmeaningful protection for the rights of copyright owners. He argued that theSony standard ‘seeks to protect not only the Groksters of this world … but thedevelopment of technology more generally’.75 He concluded that, if there is achoice between protecting copyrights and facilitating technological develop-ment, the law ‘leans in favour of protecting technology’.76 In support of thisconclusion, Breyer J pointed to the ability to bring copyright infringementactions against individual infringers, and technological tools – such as digitalwatermarking and encryption – that copyright owners can use to preventfurther illicit copying.

Others will debate whether the balance struck in Breyer J’s analysisbetween technology and copyright is sensible, and whether it finds muchgenuine support in US copyright law and the federal Constitution.77 But if weconsider this reasoning in light of international relationships between differentnations’ copyright laws, this reasoning betrays both an insular conception ofthe problems of cross-border infringement of digital material, and a unilater-alist imposition on other jurisdictions of a localised vision of the appropriatebalance between technological development and copyright protection. Mostsignificantly, Breyer J’s analysis leaves little room for the possibility that othernations might see the balance differently. Given the ease with which digitalfiles cross international borders and can interfere with foreign markets forcopyright protected materials, perhaps one unforeseen corollary of ‘technol-ogy-friendly’ policies developed in the US may be their ‘export’ into foreigncopyright systems, accompanied by the risk of upsetting whatever balanceother nations’ copyright regimes have established. Different nations andregions are in the process of developing legal and economic policies torespond to the problem of P2P networks, policies that will be formulatedagainst the key question Breyer J articulated: whether ‘gains on the copyrightswings would exceed the losses on the technology roundabouts’.78 It is notclear that all, or even most, would resolve the uncertainties by adopting apolicy that ‘leans in favour of protecting technology’. Some might favourprotecting copyright more.


75 Ibid, at 2784.76 Ibid, at 2790.77 See J.C. Ginsburg (2005), ‘Nouvelles des Etats Unis: Responsabilité pour

complicité de contrefaçon – La décision de la Cour Suprême du 27 juin 2005 dans l’af-faire MGM v Grokster’, 11 Auteurs & Médias 290 (suggesting that Breyer J’s assertionthat copyright law favours technology is warranted by neither the Copyright Act 1976nor the Copyright Clause in the Federal Constitution).

78 Grokster, 125 S Ct 2764 at 2793.

Justice Breyer’s analysis also betrays a conventional understanding of therole of the author in copyright law. Most obviously, his analysis does not focuson authors at all; his balancing analysis pitches the developers of technologyagainst the revenue interests of copyright owners. And, as between copyrightowners and those who develop new technologies ‘in the garage, the dormroom, the corporate lab, or the boardroom’,79 copyright owners are to takesecond place. Imposing the costs of technological self-help on copyrightowners risks entrenching traditional relationships between individual authorsand publishers. Those who seek to protect copyrights will likely be forced touse ever stronger technological protections against P2P products and servicesdeveloped in the nations’ board- and dorm-rooms, and authors may be drivenback into relationships with firms that can provide those kinds of services.Because few individual authors are likely to have the required technologicalexpertise, some relationships between authors and those purveying technolog-ical protection services are likely to endure. But the doctrine developed byBreyer J would increase the need for authors to seek out firms providing suchservices and enter into licensing arrangements with them, which may make iteven more difficult for authors to market their works independently.

Justice Breyer’s opinion underscores the problem that a liability standardthat favours technological development over the rights of copyright ownersrisks de facto export of these domestic policies.80 That is, if the Sony ‘safeharbour’ is capacious, we should expect more copyright protected works to be‘shared’ without compensating copyright owners. Furthermore, we could alsoexpect those copies to circulate in foreign jurisdictions, including those thatadopt more copyright-protective policies, or which, for example, are moreconcerned with ensuring an author’s ability to forge more direct relationshipswith the public, without the need to search for firms that market the highest-end technological protections. Justice Breyer provided no indication in hisopinion that the Sony balance was an appropriate policy choice for any nationother than the United States; nor did he identify what the international effectsof such a policy balance might be.


79 Grokster, 125 S Ct 2764 at 2793.80 See generally, P. Samuelson (2004), ‘Intellectual Property Arbitrage: How

Foreign Rules Can Affect Domestic Protections’, 71 University of Chicago LawReview 223 (discussing how low protection rules in one jurisdiction can undermine theforce of higher protections in other jurisdictions).

TOWARD A PRINCIPLED DEPARTURE FROMTERRITORIALITY IN THE P2P CONTEXT

Of course de jure application of domestic copyright law to conduct in foreignterritories can also seem unilateral in its approach to international copyrightrelations. For example, the Australian approach to unlicensed communicationof copyright protection works ‘from Australia’ that was discussed above cutsright across the territoriality premise. Moreover, if the Grokster liability theorywere applied in a way that was indifferent to the place of the primary infringe-ment, it too might create significant tension with the basic territorial premise.A strict territorialist might insist that analysis of the Grokster liability stan-dard, and the conditions for its application, should take into account the loca-tion of the various actions constituting infringement, both direct and indirectinfringement.

For a strict territorialist, it should matter where the primary acts of infringe-ment take place, where the advertising touting the infringing uses is directed,and most importantly, whether the direct acts of infringement are unlawful inthe place where the users of the P2P products and services are located. Theseissues may also be relevant for the Sony safe harbour, depending on whichversion applies: if numbers of infringing uses as compared with non-infring-ing uses are critical to a finding of substantial non-infringing uses, where theusers of the P2P products and services are located might also be dispositive.

Contesting Territoriality in the P2P Context

Liability for direct infringement of copyright is based on a relationshipbetween the indirect and the direct defendants, a relationship that is nowdecidedly international in character. Indirect liability, whether based on autho-risation or inducement, is determined by inferring the defendants’ mental statewith respect to both their own actions in the development of business plans,advertising strategies, and the like, and the actions of primary infringerslocated everywhere the Internet can reach. Where the liability theory itselfdepends on defendants’ communication of signals, express or implied, to P2Pusers everywhere, strict adherence to the territoriality principle seems artifi-cial. If domestic courts really need to concern themselves with exactly wherethe primary acts of infringement occurred, or are likely to occur, the legalanalysis is likely to become unmanageable. Unyielding insistence on the terri-toriality principle could impose significant impediments to a viable domesticcopyright scheme that can respond to massive amounts of copyright infringe-ment facilitated by technologies that link primary infringers in every nationwhere there is Internet access. In this aspect, Grokster and Kazaa present theantithesis of the kind of fact pattern that engaged the US Supreme Court


recently in F Hoffmann–LaRoche Ltd v Empagran SA,81 a case where plain-tiffs urged the court to mandate application of US antitrust law to foreignconduct. Empagran was premised on an assumption that the commercial activ-ity in the relevant markets was independent of the effects on United Statescommerce.82 In contrast, it is hard to imagine a case in which domestic andforeign effects are more intertwined than one involving P2P products andservices in which no geographical or other filtering devices have been appliedby the designers.

P2P products and services distil a paradox: practical steps to enforce therights of copyright owners under domestic law will almost inevitably lead toapplication in foreign territories of the applicable law, something that is mostpertinently demonstrated by the silence of both the Grokster and the Kazaacourts on the international reach of their holdings. On the other hand, as thediscussion above of Breyer J’s Grokster concurrence attempts to demonstrate,lower levels of enforcement of copyright is also very likely to have significanteffects on other nations’ copyright regimes. Faced with this paradox, perhapsthe best that we can do is to work toward identifying ‘common values’ thatmay assist in guiding tribunals and legislatures that must contend with theinterrelationship between different legal systems in the international copyrightcontext.83

Public and Private International Law

In a technological and legal context where legal standards developed in onenation can easily affect policies developed in others, it may be appropriate tolook to public international norms for guiding principles. The idea that publicinternational law principles should influence the development of domestic law,particularly where one nation’s acts affect others, has a long legal pedigree,and in the copyright context, reflects a broad consensus among many84 nationsabout appropriate legal ordering for copyright matters.85


81 542 US 155 (2004).82 The DC Circuit confirmed this assumption on remand: F Hoffman-LaRoche

Ltd v Empagran SA 417 F 3d 1267 (DC Cir, 2005) (holding that, for the purpose of 15USC § 6(a), the foreign conduct was not sufficiently connected with the effects on theUS market caused by the defendants’ conduct).

83 R. Higgins (1994), Problems and Process: International Law and How WeUse It (Oxford University Press), New York, pp. 74–7.

84 Perhaps not all, see, e.g., A. Story (2003), ‘Burn Berne: Why the LeadingInternational Copyright Convention Must Be Repealed’, 40 Houston Law Review 763at 764.

85 See R.G. Steinhardt (1990), ‘The Role of International Law as a Canon ofDomestic Statutory Construction’, 43 Vanderbilt Law Review 1103.

For copyright questions, an obvious source for principles is the BerneConvention. In most cases, adherence to the territoriality principle is consis-tent with dominant international norms reflected in the Convention. The NinthCircuit’s emphasis in Subafilms on the role of international obligations in theshaping of domestic doctrine is consistent with the underlying national treat-ment premise of the international copyright regime: each nation’s laws shouldgovern issues of infringement for the places where the infringing activityinterferes with the market that is created by each nation’s copyright laws.86

The territoriality principle is also consistent with normative principles thatrequire accountability to the citizenship that is required to bear the costs ofintellectual property enforcement. The Subafilms approach is more than ‘invo-cation of sovereignty for its own sake’, to borrow Rosalyn Higgins’ phrase.87

Moreover, the Ninth Circuit’s approach reflects the principle that public inter-national law obligations have a role in shaping domestic doctrine. TheSupreme Court recently emphasised the importance of ‘prescriptive comity’ inthe antitrust context,88 and recent copyright jurisprudence emphasises the roleof international obligations of the United States in the interpretation of theCopyright Clause.89

In the present context, however, it is also important to recognise that theBerne Convention emphasises both territoriality as a structural matter andeffective protection of the rights of authors as a governing substantiveconcern. As the Ninth Circuit in Subafilms pointed out, national treatment andterritoriality are important premises upon which the international copyrightregime is built. But they are not the only ones. The Berne Convention sprangfrom a desire to protect authors’ rights. This is suggested, for example, by the1883 statement from the Swiss government, inviting other nations to partici-pate in the process of drafting an international copyright treaty:

The protection of the rights of authors in their literary and artistic works (literaryand artistic property) is becoming more and more the object of InternationalConventions. It is, in fact, in the nature of things that the work of man’s genius, once


86 See also H. Ullrich (1995), ‘TRIPs: Adequate Protection, Inadequate Trade,Adequate Competition Policy’, 4 Pacific Rim Law and Policy Journal 153 at 160(arguing that extraterritorial application of domestic intellectual property law distortscompetition).

87 Higgins at 77.88 F. Hoffman-La Roche Ltd v Empagran SA, 542 US 155 at 169 (2004): ‘…if

America’s antitrust policies could not win their own way in the international market-place for such ideas, Congress, we must assume, would not have tried to impose them,in an act of legal imperialism, through legislative fiat’.

89 See Luck’s Music Library, Inc v Gonzales 407 F 3d 1262 (DC Cir, 2005)(international bargaining leverage secured by membership of the Berne Conventionachieved by copyright legislation relevant to the constitutionality of that legislation).

it has seen the light, can no longer be restricted to one country and to one national-ity. If it possesses any value, it is not long in spreading itself in all countries, underforms which may vary more or less, but which, however, leave in its essence and itsprincipal manifestations the creative idea. This is why, after all civilized States haverecognised and guaranteed by their domestic legislation the right of writer and ofartist over his work, the imperative necessity has been shown of protecting this rightin international relations, which multiply and grow daily.90

That general purpose, internationalist in its aspirations, is affirmed by thepreamble of the Berne Convention, which now states that the nations of theBerne Union are ‘equally animated by the desire to protect, in as effective anduniform a manner as possible, the rights of authors in their literary and artis-tic works literary and artistic works.’91 While the national treatment principlewas adopted quite early in the treaty drafting process,92 and as a structural andnormative matter, remains critical to international intellectual property rela-tions, we should be wary of the possibility that formalistic adherence to terri-toriality might undermine meaningful protection of authors’ rights, which isprecisely the idea that explicitly animates the Convention.

If public international law norms are to influence the development ofdomestic conflict of laws principles, courts should not always be impeded inimposing liability for indirect infringement in contexts in which the decisionmight have extraterritorial effects. Greater cognisance of the internationallegal context might also prompt reticence about developing policy positionssuch as those adopted by Breyer J in Grokster. In cases where the developmentof liability standards will have obvious extraterritorial effects, it might beappropriate to give more consideration to the extraterritorial implications ofdoctrinal commitments and their likely impacts on the international copyrightregime in which the United States now plays such a significant part.

CONCLUSION

Promoters of P2P products and services, along with other groups includingactivists, litigants, and a number of academics, have made sustained efforts inrecent years to challenge the idea that copyright protection, and intellectual


90 December 1883, circular note from the Swiss government to the governmentsof ‘all civilized nations’. Reprinted in Actes de la Conférence internationale pour laprotection des droits d’auteur réunie à Berne du 8 au 19 Septembre 1884 (1884) pp.8–9, cited in S. Ricketson (1987), The Berne Convention for the Protection of Literaryand Artistic Works: 1886–1986 (Kluwer, London), p. 54.

91 Berne Convention, above n. 31, Preamble.92 See Ricketson at 74.

property protection generally, is founded on unassailable societal norms. Thisis part of the politics of contemporary intellectual property law, and may makethe argument that failure to provide robust copyright protection in globalmarkets being an offence against the ‘international order’ seem somewhatmore difficult to sustain.93

Equally, however, a sustainable ‘Kazaa Revolution’ is unlikely to be onethat defies the international copyright system. Whatever its rhetorical appeal,the rallying cry of ‘it’s cool to infringe’ is not the stuff from which coherentgoverning norms are likely to develop in an increasingly interconnected world– not, at least, of the type that will appeal to most legal actors. One of themajor criticisms levelled at the Kazaa and Grokster decisions is that they arenot ‘technology-friendly’.94 But technological friendliness has not yet caughton as a principle around which an international judicial or legislative consen-sus has coalesced that would justify undermining the more established consen-sus focused on protecting authors’ rights in international commerce.


93 Higgins at 58.94 This criticism of the Australian decision was quickly made by Prof. Kim

Weatherall in her regular blog on IP issues: http://weatherall.blogspot.com/2005_09_01_weatherall_archive.html#112592939140783823.

6. A bipolar copyright system for thedigital network environment

Alexander Peukert*

INTRODUCTION

Digital technology and global networks have led to the so-called ‘digitaldilemma’.1 On the one hand, digital technology and the Internet facilitate theglobal dissemination of information at a very low cost. This feature favoursstatic efficiency in the use of existing works because works as public goodsare distributed as widely as is economically feasible. On the other hand, digi-tal technology and global networks diminish the control of copyright ownersover their copyrighted works. If a single digital copy made available on theInternet, especially in a peer-to-peer network, theoretically suffices as a masterfor an indefinite number of identical, unauthorized clones, right holders fearthat they will not be able to recoup their investment in producing the work inthe first place. Without this promise, it is argued, fewer works will be created.Beneficial dynamic effects of intellectual property protection will be lost. It isthus not surprising that copyright owners try to condition access to informa-tion on the basis of digital rights management (DRM) systems. Thesemeasures rely on digitization and therefore on the very same technology thatmakes widespread dissemination of information possible. From its very begin-ning, copyright has had to cope with and has addressed2 the tension betweenthe public interest in increasing the storehouse of knowledge and authors’

148

* A more comprehensive version of Alexander Peukert’s article was publishedin (2005) 28 Hastings Comm. & Ent. L. J. 1.

1 See Committee on Intellectual Property Rights and the Emerging InformationInfrastructure (2000), The Digital Dilemma; Congress of the United States,Congressional Budget Office (CBO) (August 2004), Copyright Issues in DigitalMedia; William W. Fisher III (2004), Promises to Keep: Technology, Law, and theFuture of Entertainment, pp.11–37; Raymond Shih Ray Ku (2002), ‘The CreativeDestruction of Copyright: Napster and the New Economics of Digital Technology’, 69U. Chi. L. Rev. 263, 270–276.

2 The search for a balance in copyright is already inherently articulated in USConst. art. I, § 8, cl. 8: ‘To promote the Progress of Science . . . by securing for limitedTimes to Authors . . . the exclusive Right to their respective Writings . . . ’.

interests in obtaining compensation to secure their investment. Digitizationand the Internet carry this tension to extremes because they optimize bothstatic and dynamic efficiency.

The current paradigm of this dilemma is P2P file sharing.3 Indeed, theconflict that arose out of P2P network development has already been called a‘war’.4 It is taking place between copyright owners, and users and their propo-nents, who want to retain the benefits of this technology for themselves andfor society at large. This dispute is far from being resolved. Besides courtproceedings over the liability of users and mere facilitators of file sharing forcopyright infringement, different proposals for future amendments of therespective laws have been made. In particular, several commentators and insti-tutions have suggested a solution where non-commercial file sharing in P2Pnetworks would be lawful and the copyright owner would be compensatedindirectly through a collective licensing scheme, a tax or a levy.5

In this chapter, I ask whether these proposals are in accordance with oblig-ations under the Berne Convention (BC),6 the TRIPS Agreement7 and theWCT.8 This question is not only of theoretical relevance. The US has ratifiedall three treaties. Overall, 157 countries are party to the Berne Convention,9

148 to the WTO and thus the TRIPS Agreement,10 and 50 to the WCT.11 Giventhat countries must adhere to their obligations under this ‘supranational copy-right law’,12 every proposal that wants a chance at being enacted has to be

A bipolar copyright system for the digital network environment 149

3 See Lawrence Lessig (2004), Free Culture: The Nature and Future ofCreativity p. 296; Peer to Peer Networks in OECD Countries, OECD InformationTechnology Outlook 2004, available at http://www.oecd.org/dataoecd/55/57/32927686.pdf, 2.

4 See, for example, (2004) ‘Streaming Media’, 12 Wired 6, 148–9; Lessig, supran. 3, at 10; Fisher, supra n. 1, at 82; Daniel J. Gervais (2004), ‘The Price of SocialNorms: Towards a Liability Regime for File-Sharing’, 12 J. Intell. Prop. L. 39, 40.

5 See infra ‘non-voluntary licenses regarding P2P file sharing’ at p. 154.6 Berne Convention for the Protection of Literary and Artistic Works, Paris Act

of 24 July 1971, as amended on September 28, 1979.7 Agreement on Trade-Related Aspects of Intellectual Property Rights of 15

April 1994.8 WIPO Copyright Treaty and Agreed Statements Concerning the WIPO

Copyright Treaty, adopted in Geneva on 20 December 1996.9 See Berne Convention for the Protection of Literary and Artistic Works,

http://www.wipo.int/treaties/en/ip/berne/index.html.10 See the WTO, http://www.wto.org/english/thewto_e/thewto_e.htm.11 See WIPO Copyright Treaty, http://www.wipo.int/treaties/en/documents/

pdf/s-wct.pdf.12 See Daniel J. Gervais (2005), ‘Towards a New Core International Copyright

Norm: The Reverse Three-Step Test’, 9 Marquette Intell. Prop. L. J. 1, available athttp://ssrn.com/abstract=499924, at 33; Jane C. Ginsburg (2001), ‘TowardSupranational Copyright Law? The WTO Panel Decision and the “Three-step Test” for

tested for conformance with these requirements under international law. Forexample, the German Ministry of Justice already declined to adopt a new limi-tation to copyright with regard to non-commercial file sharing, explicitly refer-ring to the three-step test under Berne.13

Further, the dispute settlement system of the GATT/WTO, makes it possi-ble to enforce rules of an international treaty on intellectual property for thefirst time.14 When one country adopts a trade policy measure or takes someaction that one or more fellow WTO members consider to be breaking theWTO agreements, including TRIPS,15 a dispute settlement procedure can beinstituted. According to the Uruguay Round Understanding on Rules andProcedures Governing the Settlement of Disputes (DSU), the DisputeSettlement Body may authorize the imposition of trade sanctions if the targetof the complaint does not follow the recommendations of the panel report orthe appeals report.16 As of October 2005, the WTO homepage lists 24 disputesettlement procedures relating to TRIPS,17 including a procedure concerningUS copyright law. The WTO Panel held that 17 USC § 110(5) was a violationof US obligations under the TRIPS Agreement.18 As a result the US, as atemporary arrangement between the US and the EC, agreed to make a lump-sum payment in the amount of $3.3 million to a fund to be set up by perform-ing rights societies in the European Communities for the provision of generalassistance to their members and the promotion of authors’ rights for a three-


Copyright Exceptions’, 187 Revue Internationale du Droit d’Auteur (RIDA) 3; but seePierre Sirinelli, ‘Exceptions and Limits to Copyright and Neighbouring Rights’,Workshop on Implementation Issues of the WIPO Copyright Treaty (WCT) and theWIPO Performances and Phonograms Treaty (WCCT), WIPO Document WCT-WPPT/IMP/1 of 3 December 1999, available at http://www.wipo.int, 42 (stating thatthe three-step test ‘is far from providing harmonization’).

13 See Bill for a ‘Second Act on Copyright in the Information Society’ of 27September 2004.

14 In a WTO Dispute Settlement Proceeding, the one invoking the restriction tominimum rights under TRIPS bears the burden of proof. See Panel Report, UnitedStates-Section 110(5) of US Copyright Act, WT/DS160 (15 June 2000), para. 6.9-16;Panel Report, Canada-Patent Protection of Pharmaceutical Products, WT/DS114/13(17 March 2000), para 7.16.

15 See Art. 64 TRIPS.16 See ‘Understanding on Rules and Procedures Governing the Settlement of

Disputes’, 15 April 1994, Marrakesh Agreement Establishing the World TradeOrganization, Annex 2, Legal Instruments-Results of the Uruguay Round, 33 I.L.M.1226 (1994).

17 See Index of Dispute Issues, http://www.wto.org/english/tratop_e/dispu_e/dispu_subjects_index_e.htm#bkmk137.

18 See Panel Report, United States-Section 110(5) of US Copyright Act, supra n.14.

year period commencing on 21 December 2001.19 Thus, an amendment ofnational copyright law that is in violation of TRIPS may have to be abandonedto avoid trade sanctions by other WTO members.

Therefore, international copyright law must be considered in the discussionabout the future of copyright in the digital network environment. If a proposaldoes not comport with treaty obligations, it is then necessary to either amendrespective international rules or to terminate membership, which, in the caseof the TRIPS Agreement, would mean leaving the WTO. Obviously, neither ofthese alternatives are likely to become reality. The amendment of an interna-tional treaty requires international consensus of all contracting parties.20 Toquit membership in the WTO will not be taken as a serious option in a globaleconomy by any country.

Nevertheless, discussion of the digital dilemma, especially in the US,focuses on the admittedly central search for an effective, preferably balanced,solution. Models are developed for the future. Current law is not the yardstick.Obligations under international copyright law are merely considered asdetails.21 Admittedly, proposals that start from scratch are essential to bothfuel the discussion and to finally come to an acceptable solution for all play-ers involved. The aim of this article, in contrast, is to contribute to this discus-sion by adopting a strictly positivistic view. This will help to outline a modelfor future copyright in the digital online environment that has not yet beenclearly articulated which I call the bipolar copyright system. This systemfollows from the proposals already on the table. However, it also claims to bein line with international copyright law, and thus is actually available tonational legislatures.

COPYRIGHT AND PEER-TO-PEER NETWORKS

The advent of P2P network technology and the ability of users all over theworld to exchange digital files intensified the conflict between right holdersand users about the future of copyright in cyberspace. Much is at stake for bothsides. Copyright owners fear not being able to establish a market for digital


19 See Notification of a Mutually Satisfaction Temporary Agreement, UnitedStates-Section 110(5) of the US Copyright Act, WT/DS160/23 (26 June 2003).

20 On the difficulties amending the TRIPS Agreement see Gervais, supra n. 12,at p. 28 (‘far from simple politically’); Gervais, supra n. 4, at 71 (‘any proposal tolicense P2P should take account of applicable international treaties’); Peter Eckersley(2004), ‘Virtual Markets for Virtual Goods: The Mirror Image of Digital Copyright?’,18 Harv. J.L. & Tech. 85, 157.

21 See infra ‘international copyright law’ at p. 159.

products. Users want to benefit from cheap, worldwide, and unrestricted accessto information contained in published works. It is no wonder that when even thefacts are controversial22 the possible solutions will be even more so.

In light of these developments, one commentator rightly describes thecurrent situation as a ‘kind of logjam’.23 On the one hand, P2P networks arestill intensely used and technologically improved for the sharing of digitizedcontent, some of which is copyrighted. On the other hand, right holders aretrying everything to bring an end to this allegedly harmful institution. This,however, is not to say that nobody has an idea of how to resolve this conflict.On the contrary, postulations cover the whole spectrum, from ‘abolish copy-right’ to ‘abolish P2P networks’.

Two of these approaches would not require legislative actions. First, a‘wait-and-see approach’ argues that the market will provide an efficient result,especially in the form of differential pricing, even if the legislature refrainsfrom stepping in.24 Second, several commentators and the Electronic FrontierFoundation plead instead for voluntary collective licensing of exclusive rights.Under the EFF’s proposal, the music industry would form a collecting societyand then offer file-sharing users the opportunity to ‘get legit’ by making areasonable regular payment (the EFF specifies $5 per month). So long as theypay, users would be free to download whatever they like, using whatever soft-ware works best for them.25


22 It is not undisputed, on an empirical level, whether at all, and if so, to whatextent, file sharing causes declines in sales of music and other copyrighted products.See MGM Studios, Inc. v Grokster Ltd., 125 S.Ct. 2764, 2794 (2005) (Breyer, J.,concurring); Felix Oberholzer & Koleman Strumpf (March 2004), ‘The Effect of FileSharing on Record Sales. An Empirical Analysis’, at 24–25, available athttp://www.unc.edu/~cigar/papers/FileSharing_March2004.pdf; Martin Peitz &Patrick Waelbroeck (January 2004), ‘The Effect of Internet Piracy on CD Sales: Cross-Section Evidence’, CESifo Working Paper Series No. 1122; Stan J. Liebowitz (2005),‘Pitfalls in Measuring the Impact of File-Sharing’, 51 CESifo Economic Studies 435,471–472.

23 Neil Weinstock Netanel (2003), ‘Impose a Noncommercial Use Levy toAllow Free Peer-to-peer File Sharing’, 17 Harv. J.L. & Tech. 1, 19–22.

24 See CBO, supra n. 1, at 28–33.25 See Electronic Frontier Foundation (2004), ‘A Better Way Forward: Voluntary

Collective Licensing of Music’, available at http://www.eff.org/share/collective_lic_wp.pdf; Daniel J. Gervais (2004), ‘Copyright, Money & the Internet’,paper presented at the ‘Copyright Office Comes to California’ Conference SanFrancisco, March 3, 2004, available at http://www.commonlaw.uottawa.ca/faculty/prof/dgervais/CopyrightMoneyAndTheInternet.pdf, at 22–23 (proposing a voluntarylicensing system for file sharing, especially in light of international copyright treaties);Gervais, supra n. 4, at 71; Fisher, supra n. 1, at 252–258 (describing a voluntary licens-ing regime to be implemented if the government was not willing to step in to imposethe tax-based system that Fisher prefers).

The problem with both approaches is that they have not yet become reality.Copyright owners establish more and more commercial online ventures whereusers can stream and download legally and pay for these uses individually. Butneither these lawful alternatives to file sharing, nor civil and criminal actionshave lead to a decrease of traffic in P2P networks.26 Thus, uncontrolled use ofcopyrighted works takes place as ever without generating revenues for artistsand right holders. The market has not solved the problem. Whether it ever willis uncertain. Interestingly enough, the failure to stop unauthorized file sharinghas not put enough pressure on copyright owners to agree on a voluntarycollecting and licensing scheme as proposed by the EFF and others. Rightholders are still betting on exclusivity in cyberspace.27

Not surprisingly, therefore, both parties have turned their attention to thelegislature.28 Several proposals have been put forward, differing substantiallywith respect to the aim and the practical solution suggested. At the extremes,‘anti-copyright’ models plead for a complete or nearly complete abandonmentof copyright as an exclusive right in the digital network environment, arguingthat exclusive rights in cyberspace would do more harm than good.29 The‘beyond copyright model’ instead proposes a ‘digital lock up’ to stop infring-ing uses on the net.30 Looking for a middle ground that acknowledges the needof right holders to enforce their exclusive rights effectively against illegal usesin P2P networks without banning these technologies altogether, Mark A.Lemley and R. Anthony Reese have outlined a streamlined and largely onlineadministrative proceeding overseen by the Copyright Office that gives copy-right owners a quick, low-cost alternative to enforcing their rights against indi-vidual large-scale uploaders on P2P networks.31


26 See ‘Streaming Media’, supra n. 4.27 This reluctance of copyright owners is telling with regard to the acceptance of

proposals to establish a non-voluntary licensing regime.28 See also MGM Studios, Inc. v Grokster Ltd., 380 F.3d at 1166–67 (holding

that to fix the flow of Internet innovation is a question to be resolved by Congress andnot by the courts); AT&T Corp. v City of Portland, 216 F.3d 871, 876 (9th Cir. 1999)(pointing to Congress as the right addressee for a re-examination of copyright princi-ples in cyberspace).

29 See, e.g., Shih Ray Ku, supra n. 1; Mark S. Nadel (2004), ‘How CurrentCopyright Law Discourages Creative Output: The Overlooked Impact of Marketing’,19 Berkeley Tech. L.J. 785.

30 For an overview on different approaches, see Lionel S. Sobel (2003), ‘DRMas an Enabler of Business Models: ISPs as Digital Retailers’, 18 Berkeley Tech. L.J.667, 670 et seq.; Netanel, supra n. 23, at 7–22, pp. 74–83; Aric Jacover (2002), ‘I WantMy MP3!’, 90 Geo. L.J. 2207, 2209–11; Eckersley, supra n. 20, at 86 (‘informationanarchism and information feudalism’). On filters that stop infringing uses in P2Pnetworks, see Mark A. Lemley and R. Anthony Reese (2004), ‘Reducing DigitalCopyright Infringement Without Restricting Innovation’, 56 Stan. L. Rev. 1345, 1385.

31 Lemley and Reese, supra n. 30, at 1354 et seq. For a dispute resolution mech-

Also somewhere in the middle of this spectrum of control are proposals forfuture copyright models regarding P2P networks that would replace exclusiverights in copyrightable subject matter with mandatory remuneration rights. Thefundamental notion of these concepts is that efficient control of the use of P2Pnetwork technology is not possible without banning the technology altogether orwithout severe drawbacks with regard to monitoring and privacy. To avoid thesedisadvantages, non-commercial file sharing would be legalized under a limita-tion of or exception from copyright. Right holders would be compensated by alevy or tax on products and services used for file sharing. The congeniality ofthis solution rests upon the fact that it preserves the benefits of P2P networktechnologies while at the same time guaranteeing authors compensation. InLawrence Lessig’s words, it is ‘compensation without control’.32

NON-VOLUNTARY LICENSES REGARDING P2P FILESHARING

Whereas non-voluntary licenses have for a long time been an important instru-ment in balancing the private interest of the right holder with the public inter-est in the dissemination of knowledge, a non-voluntary license covering P2Pfile sharing does not yet exist in any national copyright law.33 However,several commentators advocate models that permit non-commercial file shar-ing in exchange for a levy or tax that is meant to compensate the lossesincurred by the right holder.

Without going into detail, German and Swiss commentators state that copy-right in the digital network environment will at least partially have to bereplaced or supplemented by levies because exclusive rights would either notbe enforceable or their exercise would constrain the free flow of informationon the Internet.34 In his French dissertation, Christophe Geiger discusses


anism through a form of non-binding arbitration which could rapidly resolve copyrightinfringement cases on the Internet at low litigation expense, see also Alan R. Kabat(1998), ‘Proposal for a Worldwide Internet Collecting Society: Mark Twain andSamuel Johnson Licenses’, 45 J. Copyright Society of the USA 329, 341.

32 Lawrence Lessig (2001), The Future of Ideas: The Fate of the Commons in aConnected World; Shih Ray Ku, supra n. 1, at 263.

33 Netanel, supra n. 23, at 32.34 See Philipp Wittgenstein (2000), Die digitale Agenda der WIPO-Verträge, p.

162 (stating that copyright on the Internet should be transformed from an exclusiveright to a mere remuneration right); Artur-Axel Wandtke (2002), ‘Copyright undvirtueller Markt in der Informationsgesellschaft’, Gewerblicher Rechtsschutz undUrheberreht (GRUR) 1, 7 (arguing that the future protection of authors will probablyamount to mere remuneration rights).

several solutions addressing the fact that copyright, as it exists today, does notmeet the needs of a functioning information society. Among these solutions,the author lists compulsory licenses, especially for sui generis rights in data-bases,35 and mandatory collective administration of exclusive rights, wherecollecting societies woould be required to license certain uses on a non-discriminating, fair basis,36 a model that ultimately is very similar to a statu-tory, non-voluntary license.37

Interestingly, a richer set of proposals for non-voluntary licenses applied toP2P file sharing can be found in recent US literature.38 Glynn S. Lunney arguesthat a levy or limited tax on copying technology and storage media for privatecopying is ‘inescapable’, taking into account the dangers of an ‘encryption-based approach’.39 Raymond Shih Ray Ku is very much in line with thisreasoning with his proposal of a ‘Digital Recording Act’ as a second-best solu-tion if the abolishment of copyright would hamper the incentive to be creative.This Act would allow file sharing, but would introduce statutory levies onsubscriptions for Internet services and on the sales of computer, audio, andvideo equipment. In order to measure the extent of downloads and other uses


35 Christophe Geiger (2004), Droit d’auteur et droit du public à l’information.Approche de droit, compare para. 370–380 (R.D.T.I.); see also Christophe Geiger(2005), ‘Right to Copy v Three-Step Test’, Computer L. Rev. Int’l (CRi) 7, 10 (statingthat it would be preferable to admit private copying as an enforceable right againsttechnical devices and to solve the problem by a working system of equitable remuner-ation).

36 Geiger, supra n. 35, at para. 381–84; Lucie M.C.R. Guibault (2002),Copyright Limitations and Contracts. An Analysis of the Contractual Overridability ofLimitations on Copyright, pp. 26–27.

37 See Guibault, supra n. 36, at 26–27. On mandatory collective administrationof exclusive rights without the obligation of the collecting society to license certainuses, see Silke von Lewinski (2004), ‘Mandatory Collective Administration ofExclusive Rights – A Case Study on Its Compatibility with International and ECCopyright Law’, UNESCO e.Copyright Bulletin, No. 1.

38 See also the proposals by Jim Griffin (April 2001), ‘At Impasse: Technology,Popular Demand, and Today’s Copyright Regime’, available at http://www.62chevy.com/at_impasse.htm; Bennett Lincoff (22 November 2002), ‘A Full, Fair and FeasibleSolution to the Dilemma of Online Music Licensing’, available at http://www.quicktopic.com/boing/D/uhAMNwVb8yfkc.html; Philip S. Corwin & Lawrence M.Hadley (2004), ‘P2P: The Path to Prosperity’, 24 Loy. L. A. Ent. L. Rev. 649, 669;Eckersley, supra n. 20, at 92 (‘virtual market reward/remuneration system’). LionelSobel’s ‘Digital Retailers’ model (Sobel, supra n. 30, at 667, 673 et seq.) should not belisted among the proponents of a non-voluntary license for non-commercial file shar-ing; see Lemley & Reese, supra n. 30, at 1410 (stating that Sobel’s model is not a levyat all, because it depends on identifying and collecting from infringers).

39 Glynn S. Lunney (2001), ‘The Death of Copyright: Digital Technology,Private Copying, and the Digital Millennium Copyright Act’, 87 Va. L. Rev. 813,910–918.

of digital works on the Internet, these activities would be technologicallytracked and monitored.40 Speaking in favour of exclusive rights in works asa means to ensure adequate compensation for artists and right holders, AricJacover pleads for a similar levy or tax system as a second-best solution if thestrategy of ‘aggressively employing traditional copyright policies in theInternet distribution market’ should not ensure compensation for the use ofworks.41 Even these few examples show that a levy/tax solution forms acompromise between ever-expanding exclusivity and the abandonment ofcopyright. Advocates of both extremes refer to levies as the second-best solu-tion.

Others plead for a levy/tax system as regards P2P file sharing, not only asthe second-best, but as the primary solution. Among these ranks Neil Netanelwith his proposal for a ‘Noncommercial Use Levy’.42 His model permits – asa right protected by law that cannot be waived contractually – non-commercialcopying, online distribution in P2P networks (downloading), streaming, andadaptation of published copyrighted works (except software), provided thatthe derivative creator clearly identifies the underlying work and indicates thatit has been modified, in return for a levy which is – provided that negotiationshave failed – set by a Copyright Office Tribunal at a ‘fair return/fair income’rate (some 4 per cent of the retail price of the goods/services). The levy has tobe paid by providers of products and services whose value is enhanced by fileswapping (Internet access, P2P software and services, computer hardware,consumer electronic devices such as CD writers, MP3 players, digital videorecorders and storage media such as blank CDs). The allocation of thecollected money is made in accordance with the actual use of the content asmeasured by technology that tracks and monitors the use. Apparently Netaneldoes not concede to copyright holders the right to withdraw their works fromthe levy system and to opt for exclusive exploitation on the basis of digitalrights management instead.

In a proposal that bears much resemblance to Netanel’s ‘NoncommercialUse Levy,’ William Fisher outlines an administrative compensation system,43

even providing detailed figures on the amount of taxes that would be needed


40 Shih Ray Ku, supra n. 1, at 311–15; Raymond Shih Ray Ku (2003),‘Consumers and Creative Destruction: Fair Use Beyond Market Failure’, 18 BerkeleyTech. L.J. 539, 566 n.160.

41 Jacover, supra n. 30, at 2250–54, with reference to Kabat, supra n. 31, at336–37, who proposed a Worldwide Internet Collecting Society (WICS) which,contrary to the proposals discussed in this chapter, was meant to administer the exclu-sive rights of authors in cyberspace.

42 Netanel, supra n. 23, at 4, 35–59.43 Fisher, supra n. 1, at 199–251.

to compensate the losses to be expected from the reduction of exclusiverights.44 Fisher sketches his model as follows:

The owner of the copyright in an audio or video recording who wished to becompensated when it was used by others would register it with the Copyright Officeand would receive, in return, a unique file name, which then would be used to trackits distribution, consumption, and modification. The government would raise themoney necessary to compensate copyright owners through a tax – most likely, a taxon devices and services that consumers use to gain access to digital entertainment.Using techniques pioneered by television rating services and performing rightsorganizations, a government agency would estimate the frequency with which eachsong and film was listened to or watched. The tax revenues would then be distrib-uted to copyright owners in proportion to the rates with which their registered workswere being consumed. Once this alternative regime were in place, copyright lawwould be reformed to eliminate most of the current prohibitions on unauthorizedreproduction and use of published recorded music and films.45

Fisher allows right holders a hybrid marketing strategy, that is, to sellcopy-protected CDs while simultaneously distributing unencryptedversions of the song, receiving shares of the tax for these uses.46 In addi-tion, copyright owners would be free to implement DRM without register-ing their work for the tax system.47 The statutory default, however, wouldbe a limitation for non-commercial file sharing. It would also apply toworks not registered.48

In The Future of Ideas, Lawrence Lessig argued that file sharing should beempowered by recognizing a system of compulsory licenses similar to thoseused in cable retransmission, the fee being set by a policy maker striking theright balance.49 In his 2004 book Free Culture, he still agrees with Fisher’sproposal, but he also stresses that the current P2P network technology mightbecome irrelevant when faster and easier Internet access will empower users toswitch from downloading to streaming content from a commercial service towhich they subscribe. Due to this possible technological development, Fisher’s


44 Fisher, supra n. 1, at 214 ($2.389 billion would have to be raised for copyrightowners in movies, musical works and sound recordings).

45 Id. at 9.46 Id. at 248.47 Id. On the potential of this solution to comply with international copyright law

treaties, see infra ‘Conflicts with a normal exploitation’ at p. 164 and ‘Features andbenefits’ on p. 181.

48 See id. at 204 (stating that if a work was not registered, the use would belawful but uncompensated), at 247 (‘. . .if a copyright owner opted out of the systementirely, releasing only an encrypted version of his or her recording. . .’).

49 Lessig, supra n. 32, at 254–55.

system would only serve in the interim period, to the extent that actual harmis demonstrated.50

Jessica Litman differentiates between ‘sharing’ and ‘hoarding’ as the twopossible ways to exploit works on the Internet.51 By that, she means that rightholders can choose between letting their works be shared in P2P networks inexchange for a blanket fee or levy/tax disbursed primarily to the musicians andcomposers, or hoarding their works in exclusively exploited online ventures,protected by DRM. Sharing would be the legal default rule.52 However, rightholders would be able to opt out of the levy system. To this end, they wouldhave to make their work available in a *.drm format capable of conveyingcopyright management information, as defined in 17 USC § 1202, that incor-porates and facilitates digital rights management.53 If they had alreadyreleased their works in other formats, they still could – after a 24-month graceperiod before any withdrawal would take effect – withdraw it from thelevy/tax system. In order to do so, however, the right holders would have torecall copies of the work released in other formats and offer any consumerswho own authorized, commercial copies in a non-*.drm format the opportu-nity to exchange those copies for *.drm copies at no charge.54

Summing up, these concepts take the same starting point: ‘compensationwithout control’ is considered to be the best way to reap the fruits of the digi-tal network technologies for authors and the general public alike.Nevertheless, important differences can be observed. For example, not allmodels afford the copyright owner the right to withhold his or her work fromthe levy/tax system and to go for exclusivity in cyberspace instead. Even thosethat do so, such as the models of Jessica Litman and William Fisher, advocate‘sharing’ as the legal default. As will be shown in the following sections, thesedifferences are important when it comes to the question of compliance withinternational copyright law. Finally, it should be noted that the mentionedproposals are already influencing current political debates about copyright andfile sharing. Whereas content holders propose the application of softwarefilters that check files on the fly and order the user’s computer to terminate adownload if a file’s ‘fingerprint’ matches that of a restricted song contained in


50 Lessig, supra n. 3, at 298, 301; see also Paul Goldstein (2003), Copyright’sHighway. From Gutenberg to the Celestial Jukebox, pp. 202–03 (2nd edn.).

51 Jessica D. Litman (2004), ‘Sharing and Stealing’, 27 Hastings Comm. & Ent.LJ 1, 39–50.

52 Litman, supra n. 51, at 41. On the consequences of this solution for thecompliance of the proposal with international copyright law see infra ‘Compliancewith international copyright law’ at p. 182.

53 Litman, supra n. 51, at 46–48.54 Id. at 48.

an online database, providers of P2P network software and services advocatea collective licensing regime similar to that currently applied to broadcastradio and web casting under US copyright law.55

INTERNATIONAL COPYRIGHT LAW

The following section will adopt a positivistic view in analysing the above-mentioned proposals. In particular, it will discuss whether the three-step testconflicts with the implementation of the suggested regimes in national copy-right law. The three-step test limits the extent to which national legislaturesmay impose limitations on and exceptions to exclusive rights. In other words,it marks the border between exclusivity and non-voluntary licenses.56

Additionally, this section will consider the obligation of contracting parties tothe WIPO Copyright Treaties to provide adequate legal protection and effec-tive legal remedies against the circumvention of effective technologicalmeasures.57

The proposals for levy/tax systems to cover non-commercial file sharingdeal with these questions of compliance with international treaty obligationsmarginally at best. Some papers do not attend to this question at all.58

Lawrence Lessig acknowledges that ‘some of the changes’ he proposes wouldrequire amendments to ‘or the abrogation of some treaties’, listing the BC, theWIPO Treaties and TRIPS.59 William Fisher briefly explicates that hisproposed limitation to exclusive rights60 would necessitate amendment of the


55 See 9 BNA Electronic Commerce & Law Report 204-05 (2004); Netanel,supra n. 23, at 35–36.

56 On the functions of the three-step test, see Martin Senftleben (2004),Copyright, Limitations and the Three-Step Test. An Analysis of the Three-Step Test inInternational and EC Copyright Law, pp. 118–124.

57 See Art. 11 WCT, Art. 18 WPPT.58 See Lunney, supra n. 39, at 910–18; Sobel, supra n. 30, at 673; Shih Ray Ku,

supra n. 1, at 311–15; Shih Ray Ku, supra n. 40, at 566 n. 160; Lemley and Reese,supra no. 30, at 1414–31 (hinting only at the widespread adoption of TRIPS and theBerne Convention).

Eckersley, supra n. 20, at 152–58, is the only proponent of a tax/levy system for filesharing who offers a more detailed discussion of Art. 13 TRIPS.

59 Lessig, supra n. 32, at 251 n. 14.60 Fisher, supra n. 1, at 247 proposes a new section 107A of the US Copyright

Act that would permit:• Reproduction of a musical composition, sound recording, or motion picture for

noncommercial purposes (i.e. consumption, not resale);• Preparation of a derivative work of a sound recording or motion picture registered

pursuant to the new scheme, provided that the derivative work is also so regis-tered before it is made available to the public;

BC and the TRIPS Agreement. Only Art. 13 BC allows some flexibility withregard to music.61 According to Jessica Litman, a model in which the rightholders can withdraw their work from the levy system would ‘at leastarguably’ be ‘compliant’ with treaty obligations under the BC and WIPOtreaties.62 She apparently doubts, however, whether her proposal for a levy/taxsystem as the statutory default rule with an opt-out-procedure for right hold-ers to be eligible for exclusive exploitation comports with the prohibition offormalities for copyright protection under the BC.63 Finally, Neil Netanelstates that the levy he proposes would comport with Art. 13 TRIPS because itwould be limited to non-commercial uses and would provide a solution to thepractical implausibility of enforcing proprietary copyrights in the global P2Parena.64 The following section will analyse which of these clearly differingassessments is at least arguably correct.

Overview

All of the aforementioned proposals draw upon a limitation of or exception toexclusive rights. With some differences in detail, the concepts permit non-commercial reproduction, distribution and public performance (streaming) ofa musical composition, sound recording, or motion picture via the Internet.65

Thus, they restrict both the reproduction right and the right of communicationto the public, which includes the right to make protected content available tothe public. Both rights are regulated as mandatory minimum rights in interna-tional copyright law.66


• Distribution of a sound recording (including a musical composition embodiedtherein) or motion picture via the Internet;

• Public performance of a sound recording (including a musical compositionembodied therein) via a digital audio transmission; and

• Public performance of a motion picture via a digital video transmission.61 Fisher, supra n. 1, at 248–49.62 Litman, supra n. 51, at 45–46.63 Litman, supra n. 51, at 46 n. 166.64 Netanel, supra n. 23, at 60 n. 199.65 Fisher, supra n. 1, at 247; Netanel, supra n. 23, at 37–38 (non-commercial

copying, distribution, and streaming over digital networks); Sobel, supra n. 30, at 683(copying and redistribution online). Fisher’s and Netanel’s concepts additionallypermit derivative creations, see Fisher, supra n. 1, at 234–36, 247 and Netanel, supran. 23, at 38–40. Since this form of use is not necessarily involved in file sharing, thischapter does not dwell on this proposal.

66 See Art. 9 BC; Art. 9(1) TRIPS; Agreed Statement concerning Art. 1(4) WCT(reproduction right); Arts. 11, 11bis(1), 11ter(1), 14(1), 14bis(1) BC; Art. 8 WCT; Arts.10, 14 WPPT (right of communication to the public).

These exclusive rights are subject to the three-step test, which was adoptedin 1967 in Art. 9(2) BC67 and later in Art. 13 TRIPS,68 Art. 10 WCT69 and Art.16(2) WIPO Performances and Phonograms Treaty (WPPT).70 It proclaimsthat contracting parties may, in their national legislation, provide for limita-tions of or exceptions to the rights granted to authors

1. in certain special cases2. that do not conflict with a normal exploitation of the work and3. that do not unreasonably prejudice the legitimate interests of the author.

The named provisions are regulated in different international conventions andtreaties, which have partially differing goals. This is especially true regardingthe TRIPS Agreement, which was intended to reduce distortions of and imped-iments to international trade.71 Nevertheless, this chapter will not analyse theprovisions individually because each wording is practically identical and all


67 Report on the Work of Main Committee I of the Conference in Stockholm1967, reprinted in: WIPO, The Berne Convention for the Protection of Literary andArtistic Works from 1886 to 1986 (Centenary) 196–97 (1986) [hereinafter Report inStockholm 1967]. Art. 9(2) BC applies only to the reproduction right as regulated inparagraph one of that article.

68 Art. 13 TRIPS is not confined to the rights newly introduced by the TRIPSAgreement, but also applies to the rights provided for under the BC. See Panel Report,United States-Section 110(5) of US Copyright Act, supra n. 14, at para. 6.80; MihályFicsor (2002), ‘How Much of What? The Three-Step Test and Its Application in TwoRecent WTO Dispute Settlement Cases’, 192 Revue Internationale du Droit d’Auteur111, 153, 163; Sam Ricketson, ‘WIPO Study on Limitations and Exceptions ofCopyright and Related Rights in the Digital Environment’, Standing Committee onCopyright and Related Rights, Ninth Session, Geneva, 23 to 27 June 2003, WIPODocument SCCR/9/7 of 5 April 2003.

69 Art. 10(1) WCT covers the rights added by the WCT. Jörg Reinbothe andSilke von Lewinski, The WIPO-Treaties 1996 Art. 10 WCT no. 26 . Art. 10(2) WCT 2relates to the rights provided for in the BC. See WCT, Agreed Statement to Art. 10(2)(‘It is also understood that Article 10(2) neither reduces nor extends the scope ofapplicability of the limitations and exceptions permitted by the Berne Convention.’);Reinbothe and von Lewinski, at no. 6.

70 For the purpose of this chapter, I assume that the country that considers imple-menting one of the proposals is a member of or contracting party to the BC, the TRIPSAgreement and the WIPO Copyright Treaties.

71 According to the preamble of the TRIPS Agreement, it is also ‘taking intoaccount the need to promote effective and adequate protection of intellectual propertyrights.’ In this respect, TRIPS parallels the WCT (‘to develop and maintain the protec-tion of the rights of authors in their literary and artistic works in a manner as effectiveand uniform as possible’) and the BC (‘to protect, in as effective and uniform a manneras possible, the rights of authors in their literary and artistic works’).

provisions derive from Art. 9(2) BC.72 Moreover, this article does not attempta comprehensive interpretation of the three-step test according to the ViennaConvention on the Law of Treaties.73 Rather, it summarizes how nationalcourts, the WTO Panel and legal literature construe the elements of the test. Itthen applies these definitions to the concepts underpinning a levy/tax systemfor P2P file sharing.

Interpretation of the Three-step Test

As regards the interpretation of the three-step test, it is undisputed that thethree steps have to be applied cumulatively74 and successively.75 In addition,it is generally acknowledged that in construing the provisions of the three-steptest, one has to keep in mind the overall aim of the conventions: to provide foradequate, balanced copyright protection.76

Certain special casesThe first condition established by the three-step test is that limitations of orexceptions to exclusive rights may be introduced only in certain special cases.As with all other elements of the test, divergent opinions exist as to what thisrequirement means in detail. Some argue that a restriction in national law mustbe clearly defined and should be narrow in its scope.77 The scope of the excep-


72 With regard to Art. 13 TRIPS, see Art. 2(2), 9(1) TRIPS and Daniel Gervais(2nd ed. 2003), The TRIPS Agreement: Drafting History and Analysis 2.124; PanelReport, United States-Section 110(5) of the US Copyright Act, supra n. 14, at para.6.66; Ginsburg, supra n. 12, at 35; Senftleben, supra n. 56, at 99 et seq. But seeGervais, The TRIPs Agreement, at 2.11.

73 See Panel Report, United States-Section 110(5) of the US Copyright Act,supra n. 14, at para. 6.43–46; Sam Ricketson (1987), The Berne Convention for theProtection of Literary and Artistic Works: 1886–1986, pp. 134–44; Ricketson, supra n.68, at 5–9; Senftleben, supra n. 56, at 99–114.

74 Failure to comply with any one of the three conditions results in the limita-tion/exception being disallowed. See Panel Report, United States-Section 110(5) of theUS Copyright Act, supra n. 14, at para. 6.74, 6.97; Reinbothe and von Lewinski, supran. 69, Art. 10 WCT no. 14.

75 See the records of the WCT negotiations, reproduced in Mihály Ficsor (2002),The Law of Copyright and the Internet: the 1996 WIPO Treaties, Their Interpretation andImplementation 5.134; Ficsor, supra n. 68, at 120–21; Ginsburg, supra n. 12, at 40–41.

76 With regard to the BC see Ricketson, supra n. 73, at 47–48 (a pure ‘maxi-malist’ view is mistaken); Ficsor, supra n. 75, 5.06–8. Regarding Art. 7 and 8 TRIPSsee Panel Report, Canada-Patent Protection of Pharmaceutical Products, supra n. 14,at para. 7.26. Regarding the WCT see Reinbothe & von Lewinski, supra n. 69, Art. 10WCT no. 7.

77 Panel Report, United States-Section 110(5) of the US Copyright Act, supra n.14, at para. 6.112; Ricketson, supra n. 731, at 482; Ficsor, supra n. 68, at 129, 227;

tion has to be known and particularized so that it becomes foreseeable whethera given use will be subject to the limitation/exception.78 Though it seems clearthat this condition does not rule out concepts like fair dealing or fair use, ‘anincalculable, shapeless provision exempting a wide variety of different uses’is deemed to be impermissible.79 Moreover, the WTO Panel has held that thebusiness exemption of 17 USC § 110(5)(B) is not a ‘certain special case’because a ‘substantial majority of eating and drinking establishments andclose to half of retail establishments’ are covered by the exemption.80 Thus,the panel adopted a quantitative view regarding the first step.81

Regarding the ‘specialness’ of the limitation or exception, some commen-tators ask whether some clear reason of public policy or a rational basis forjustification need exist for the restriction;82 whether there is an understandableneed for the reconciliation of the user’s interests with the author’s interests.83

However, the WTO Panel views the legitimacy of public policy as only ofsubsidiary relevance in applying the first element of the test.84

In my view, a non-voluntary license in national copyright law privilegingnon-commercial file sharing on the Internet could in fact constitute a specialcase under the three-step test. First, a limitation or exception that is gearedtowards non-commercial reproduction and communication to the public with


Reinbothe and von Lewinski, supra n. 69, Art. 10 WCT no. 15. With regard to Art. 30TRIPS (‘limited exceptions’) see Panel Report, Canada-Patent Protection ofPharmaceutical Products, supra n. 14, at para. 7.30; Gervais, supra n. 72, at 2.125;Ficsor, supra n. 75, at 151 (extensive use of compulsory licensing not in line with Art.13 TRIPS).

78 Panel Report, United States-Section 110(5) of the US Copyright Act, supra n.14, para. 6.108; Senftleben, supra n. 56 at 137.

79 Senftleben, supra n. 56 at 133–137. Due to the fact that few countries wouldact in a purely arbitrary way and any exception short of a complete repeal of theCopyright Act would arguably be a certain special case. Gervais, supra n. 12, at 17,argues that only the second and third step really embody a restriction to future limita-tions and exceptions.

80 Panel Report, United States-Section 110(5) of the US Copyright Act, supra n.14, para. 6.133. Contra Senftleben, supra n. 56, at 140–44 (disapproving of the quan-titative approach of the WTO Panel because the outcome of the second criterion ispredetermined).

81 But see Panel Report, Canada-Patent Protection of Pharmaceutical Products,supra n. 14, para. 7.49 (holding that the first step does not directly address the issue ofeconomic impact); Ficsor, supra n. 83, at 229 (critical of this pure statistical approach).

82 Ricketson, supra n. 73, at 482 ; Ficsor, supra n. 75, at 129–32, 227; Reinbotheand von Lewinski, supra n. 69, Art. 10 WCT no. 15; but see Ricketson, supra n. 68, at22.

83 Senftleben, supra n. 56 at 144–52.84 Panel Report, United States-Section 110(5) of the US Copyright Act, supra n.

14, para. 6.102-13; Ginsburg, supra n. 12, at 39-43 (no normative inquiry at this point);Ricketson, supra n. 68, at 22.

regard to P2P networks is clearly defined and can easily be distinguished fromimpermissible uses. For example, posting a work on a website or running a‘P2P dark net’ where users have access only on a subscription basis would notbe privileged, because these uses have nothing to do with P2P technology(posting a work on a web site) or are made for commercial purposes (runninga ‘dark net’). Second, advocates of non-voluntary license regimes raise severaljustifications: namely, their concepts would preserve the promising advan-tages of global digital networks for instant and global dissemination of knowl-edge, especially for those works that are not adequately exploited and offeredby the right holder.85 Third, the ‘quantitative’ approach taken by the WTOPanel misconceives the scope of the limitation/exception and its conse-quences, on the basis that the proprietary exploitation of the work in generalmust be analysed under the second step, not the first.86

Conflict with a normal exploitationProceeding to step two, the proposals must not conflict with a normal exploita-tion of the work. This is probably the element of the three-step test that raisesthe most doubts regarding the scope of application and its effect on nationalcopyright legislation.

First, it is of utmost importance to note that, according to a nearlyuniformly accepted understanding based on the wording and structure of thetest, a non-voluntary license may only be introduced in national law if it clearsthis hurdle. In particular, the implementation of a levy cannot cure a conflictof the underlying limitation/exception with the second step, even if it compen-sates for the losses of the copyright owner. This aspect of compensation isrelevant only with regard to step three.87


85 On the assets of the proposals see Lessig, supra n. 3, at 296–97. But seeRicketson, supra n. 68, at 75 (unqualified assertion of ‘public interest’ is not enough);similarly Senftleben, supra n. 56, at 162 (with regard to digital private copying).

86 Senftleben, supra n. 56, at 140–144.87 Report in Stockholm 1967, supra n. 67, at 197 (the sequence would afford a

more logical order for the interpretation of the rule); Panel Report, United States-Section 110(5) of the US Copyright Act, supra n. 14, para. 6.73–4; Ginsburg, supra n.12, at 45–53; Claude Masouyé (1978), Guide to the Berne Convention for theProtection of Literary and Artistic Works (Paris Act, 1971), pp. 55–56; Ricketson,supra n. 73, at 483–485; Ricketson, supra n. 68, at 27; Henri Desbois et al. (1976), LesConventions Internationales du Droit d’Auteur et des Droit Voisins, para. 173; Ficsor,supra n. 75, at 5.58; Senftleben, supra n. 56, at 130–1; Contra Geiger, supra n. 35, atpara. 418–420; Christophe Geiger (2005), ‘Comment’, 36 International Review ofIntellectual Property and Competition Law (IIC) 151, 157 (proposing to read the three-step test backwards and to start with the third step in order to accomplish a flexible,balanced system).

In defining ‘normal’ exploitation, it is accepted that something less than fulluse of an exclusive right has to be meant in order not to render every restric-tion impermissible and thus the provision itself superfluous.88 Moreover,‘normal’ implies both an empirical and a normative element.89

Regarding the empirical element (the degree of market displacementfollowing from the restriction), different standards have been articulated. Ithas been variously maintained that a limitation/exception conflicts withnormal exploitation:

if it causes a serious loss of profit;90

if it covers uses for which the author would ordinarily expect to receive a fee;91

or if it applies to those forms of exploitation that currently generate significant ortangible revenue or which, with a certain degree of likelihood and plausibility, couldacquire considerable economic or practical importance as opposed to uses that donot compete with non-exempted uses (actual and potential effects).92

According to the prevailing opinion, the existence of a conflict with normalexploitation for each exclusive right is judged separately.93 In contrast,Senftleben refers to a deprivation of an actual or potential market, which typi-cally constitutes a major source of income, which carries weight within theoverall commercialization of works of the relevant category and, conse-quently, belongs to the core of copyright.94

Whether additional aspects can be derived from the often referred-tonormative element of ‘normal exploitation’ is still largely unclear.95 In light ofthe fact that DRM systems enable the right holder to exploit a work even on a


88 Panel Report, United States-Section 110(5) of the US Copyright Act, supra n.14, para. 6.167.

89 Panel Report, United States-Section 110(5) of the US Copyright Act, supra n.14, para. 6.166–78; Panel Report, Canada-Patent Protection of PharmaceuticalProducts, supra n. 14, para. 7.54; Ficsor, supra n. 68, at 139.

90 Masouyé, supra n. 87, at 56.91 Ricketson, supra n. 73, at 482–3; Ricketson, supra n. 68, at 23; critical of this

‘subjective’ approach: Kamiel J. Koelman (2003), ‘De nationale driestappentoets’, 17Tijdschrift voor Auteurs-, Media- & Informatierecht (AMI) 6, 7 (noting that this argu-ment tends to be circular).

92 Panel Report, United States-Section 110(5) of the US Copyright Act, supra n.14, para. 6.181–87; Ricketson, supra n. 68, at 24; Gervais, supra n. 12, at 18; Ficsor,supra n. 68, at 137.

93 Panel Report, United States-Section 110(5) of the US Copyright Act, supra n.14, para. 6.173; Reinbothe and von Lewinski, supra n. 69, Art. 10 WCT no. 18.

94 Senftleben, supra n. 56 at 177–94.95 See Panel Report, United States-Section 110(5) of the US Copyright Act,

supra n. 14, para. 6.178 (holding that the normative approach to defining normalexploitation includes ‘inter alia a dynamical element capable of taking into accounttechnological and market developments’).

pay-per-use basis, it is argued that market failure considerations and decreas-ing transaction costs cannot be the sole line of argument. Otherwise, generallyaccepted restrictions for, say, criticism, parody, or scholarship could be arguedto contravene step two.96

Applying these definitions to the proposals raises severe doubts regardingtheir compatibility with this step of the three-step test. This is because the usescovered by the proposed non-voluntary license, that is, copying and distribut-ing content online by way of up- and downloads or streaming, are a source ofincome today and will probably become even more important in the future.Right holders are increasingly establishing commercial platforms to offer theircontent for download or streaming.97 Assuming that a complete shift tocommercial online distribution by way of streaming is plausible, at least formusic and perhaps motion pictures, even Senftleben’s restrictive interpreta-tion, according to which a significant effect on the overall commercializationof the work is necessary, to run afoul of this step would arguably assume aconflict. It thus appears non-voluntary licenses covering non-commercial filesharing can hardly be considered to be in line with the second criterion of thethree-step test.98

This conclusion, however, does not exhaust the problem as the aforemen-tioned application of the three-step test relies upon a new ‘type’ of protectionand factual exclusivity that Stefan Bechtold has called ‘copyright cast in sili-con’99 – DRM systems. This technology enables right holders to launchcommercial services in the digital network environment. With the advent oftechnological protection measures, the copyright owner not only enjoys exclu-sivity based on the rights granted to him or her in national and internationalcopyright law, but DRM systems also make it possible to establish an addi-tional, factual exclusivity supplemented with legal protection against thecircumvention of those technological measures.100

As already indicated, contracting parties of the WIPO Copyright Treatiesare obligated to provide legal protection of technological measures and rightsmanagement information systems. Are the tax levy proposals in accordance


96 Ginsburg, supra n. 12, at 50–51; Ricketson, supra n. 68, at 25.97 MGM, 125 S.Ct. at 2795–96 (Breyer, J., concurring).98 This is also true in respect of Sobel’s Digital Retailer Model (supra n. 30),

which aims at preserving for the right holder the ability to set the rates for a download,because setting the price is only one feature of exclusivity apart from when, to whatextent, and how (e.g. via streaming or via download) an asset may be used by others.

99 Stefan Bechtold (2002), Vom Urheber- Zum Informationsrecht, p. 279.100 See Art. 11, 12 WCT, Art. 18, 19 WPPT; 17 USC Chapter 12; Art. 6, 7

Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001on the Harmonisation of Certain Aspects of Copyright and Related Rights in theInformation Society, OJ L 167/10 of 22 June 2001 (hereinafter Copyright Directive).

with these international requirements? And how does this legal protectionrelate to the specifications of the three-step test?

Regarding rights management information, most of the proposals actuallydraw upon ‘fingerprinting’ and ‘watermarking’ technologies. They do so inorder to monitor the ongoing uses in P2P networks for determining the sharesof each right holder. The establishment of a levy/tax system thus benefits from,and relies upon, the mandatory protection of rights management informationsystems according to Art. 12 WCT. A violation of this treaty obligation is notapparent.

Much more problematic in this context is the mandatory protection of tech-nological measures required by Art. 11 WCT. A complete prohibition of tech-nological measures in national law would obviously be in conflict with thisrequirement. However, none of the proposals discussed in this article suggeststhat.

Neil Netanel’s ‘Noncommercial Use Levy’, however, rests upon the idea thatall works are covered by the limitation/exception to copyright and are thuslawfully available in P2P networks. This premise can only be fulfilled if rightholders do not have the opportunity to withhold their works from this system.Consequently, Netanel’s proposal suggests that right holders would not be enti-tled to employ technological DRM controls to block the privileged uses or, at thevery least, it would be legal for users to circumvent DRM controls and for suppli-ers to distribute circumvention tools needed to engage in privileged uses.101

Would such a limitation of the legal protection of technological protectionmeasures be in accordance with the WIPO copyright treaties? This raises the veryfundamental question of how this additional protection layer for copyright,102 asregulated in Art. 11 WCT, relates to the three-step test (Art. 10 WCT), whichhistorically corresponded solely to exclusive rights granted by law.

As both provisions are regulated in the same treaty, they must not beconstrued separately. Adopting this view, it is certainly in accordance with thistreaty to provide for narrow limitations/exceptions in line with Art. 10 WCTand to restrict the legal protection of technological measures to the remaining


101 Netanel, supra n. 23, at 40. Sobel does not address this question expressly, butit seems that his model is meant to comprise all copyrighted works and that it impliesthat works can be downloaded, which would also require a prohibition of certainrestrictive technologies, e.g. those that facilitate pay-per-use models. See Sobel, supran. 30, at 683–93.

102 See Chamberlain Group, Inc. v Skylink Techs., Inc., 381 F.3d 1178, 1192,1202 (Fed. Cir. 2004) (holding that 17 USC § 1201 et seq. do not establish a new,highly protective alternative regime for copyrighted works and a new property right,but instead prohibit forms of access that bear a reasonable relationship to the protec-tions that the Copyright Act otherwise affords as an additional protection layer).

(broad) scope of exclusive rights.103 For example, it would not be a violationof the WCT to limit copyright as regards quotations and to legislate that aperson may circumvent a technological measure for the sole purpose of copy-ing a part of the work in order to make a quotation. Consider the example ofincorporating sequences of movie A, available only on copy-protected DVDs,into movie B for the purpose of commenting on movie A’s statements.104

But what about also applying a limitation/exception for non-commercialfile sharing to the anti-circumvention provisions, as Netanel suggests? Article11 WCT proclaims that contracting parties shall provide adequate legal protec-tion of effective technological measures that restrict acts in respect of worksnot authorized by the authors concerned or permitted by law. At first glance,it seems that this wording would not require contracting parties to providelegal protection for technological measures that restrict uses covered by sucha limitation/exception, as the obligation under Article 11 WCT does not extendto acts permitted by law. Thus, if a national legislature implemented a broadlimitation/exception, for example, for file sharing, that country would conse-quently be free to confine the anti-circumvention provisions accordingly.Obviously, this reasoning would open the door for contracting parties to chipaway at both legal and factual exclusivity in the digital online environment,particularly regarding file sharing.

This solution, however, would amount to a violation of obligations underthe WCT. As outlined above, a limitation/exception for non-commercial filesharing would run afoul of the three-step test as the privileged P2P networkswould compete with commercial online ventures licensed by the right hold-ers.105 This latter kind of ‘hoarding’ in cyberspace rests upon DRM. There isno indication that this mode of exploitation may not be regarded as ‘normal’under the three-step test. On the contrary, the WCT acknowledges that theadoption of DRM is crucial for exclusive exploitation in cyberspace. This canbe shown by the fact that it prohibits circumvention of technological measures.Considering the possibility of DRM-based pay-per-use business models, onecould even argue that any restriction to copyright contravenes the three-steptest because any use of the work forms part of this ‘normal’ exploitation.106

Even if one does not want to go that far, a combination of a broad limita-tion/exception with limited legal protection of DRM systems (that is, circum-


103 Ficsor, supra n. 75, at C11.10. This is the approach of the DMCA that givesusers a right to hack, but only under very restricted circumstances. See 17 USC §1201(d)-(j).

104 For example, critics of Michael Moore considered making a point-by-pointrebuttal of his movie ‘Fahrenheit 9/11’.

105 Supra ‘Conflict with a normal exploitation’ at p. 164.106 See Koelman, supra n. 91, at 7.

vention is legal if done to engage in privileged uses, for example, non-commercial file sharing) or even a prohibition of technological measures thatrestrict these permitted uses is not in line with the three-step test and themandatory protection of technological measures.

This result, however, does not render all ideas for a levy/tax system cover-ing non-commercial file sharing unlawful. Accounting for DRM systemswhen applying the three-step test might result in an even greater freedom ofcontracting parties to structure their national copyright law: the idea behindthis consideration is that right holders feature a new kind of exclusivity if theyimplement DRM systems that eventually prevent the work from being usedwithout permission, for example, ‘shared’ online. There are now two protec-tion layers for a copyrightable work. The first one is exclusive rights undercopyright. The second one is the application of technological measures and thelegal rules against circumventing this factual exclusivity. The legislature canlimit both layers in parallel. For example, national copyright law can limitexclusive rights and the legal protection of technological measures with regardto quotations.

Both protection layers can, however, also be treated differently. By ‘differ-ently’, I mean that national copyright law would, on the one hand, grant nearlylimitless anti-circumvention protection to DRM systems in order to enableproprietary business models in cyberspace (exclusivity/‘hoarding’). On theother hand, a limitation/exception would allow non-commercial file sharingunder a levy/tax system, provided that the right owner does not implementDRM. The copyright owner would thus be free to choose which kind of protec-tion to adopt. With that freedom to choose, exclusivity as the fundamentalfeature of current international copyright law is not restricted by a statutorylimitation/exception imposed by national law, but voluntarily by the rightholder. This is the basic notion of the bipolar copyright system and the reasonwhy this approach – if implemented in national copyright law – would not bea violation of the three-step test or the obligation to protect technologicalmeasures.

One nevertheless has to consider some possible counter-arguments in viewof international copyright law. Article 31(3)(b) of the Vienna Convention onthe Law of Treaties proclaims that ‘there shall be taken into account, togetherwith the context . . . any subsequent practice in the application of the treatywhich establishes the agreement of the parties regarding its interpretation.’Anagreement of the contracting parties regarding the permissibility of a ‘bipolarsystem’ cannot yet be observed. Broad non-voluntary licenses have, until now,only been accepted to the extent that the exercise of exclusive rights is practi-cally impossible (as in the case of private copying in the analog world). Theyhave not been adopted in situations where the copyright owner simply refusesto implement readily available enforcement mechanisms. In addition, legal


protection of technological measures is dealt with only in the WIPO CopyrightTreaties and not in the TRIPS Agreement. This may be one reason why theWTO Panel has generally refused to consider the failure of right holders toexercise their rights (due to a lack of effective or affordable means of enforce-ment) when deciding what constitutes normal exploitation.107

However, these arguments are not persuasive. Many copyright owners, forexample, small start-up record labels and single creators, do not currently andmost likely will not in the future adopt DRM to exploit a work in cyberspacesimply because it is too difficult or expensive for them. At the same time,modern technologies and P2P networks enable these right holders to cheaplyproduce and publish their works for a worldwide audience.108 Copyright law asthe conventional protection layer, however, cannot be effectively enforced togenerate sufficient income. Therefore, commercialization of works in cyber-space can be said to be impossible or extremely impractical for these right hold-ers. In acknowledging this problem, some authors state that the three-step testactually obliges contracting parties to impose a levy in order to compensate forthe losses incurred by the right holder if exercising the right is impossible.109

Moreover, if the right owner, for whatever reason, does not implementrestrictive DRM systems but instead prefers to benefit from a levy or tax forstatutorily privileged uses in cyberspace, there cannot be a conflict with the‘normal,’ that is, DRM-based, exploitation. P2P networks simply will notcompete with proprietary business models because, if applied, technologyprevents the respective work from being available at all in unrestricted P2Pnetworks. Admittedly, this assumption will work only if technologicalmeasures prevail over existing restrictions to exclusive rights. In other words,any circumvention of technological measures must be prohibited, even if theintended use is permitted by law. If the right holder chooses exclusivity, thisexclusivity has to be far-reaching, as it is under current US and Europeancopyright law. Only in this case can the copyright owner effectively build apay-per-use business model on DRM systems.110 Additionally, only this


107 Panel Report, United States-Section 110(5) of the US Copyright Act, supra n.14, para. 6.188.

108 This notion can be traced back to the digital dilemma stemming from digiti-zation and the Internet. See supra ‘Introduction’ at p. 148.

109 See Ficsor, supra n. 75, at C10.34; Sirinelli, supra n. 12, at 28; Ricketson,supra n. 68, at 75; Netanel, supra n. 23, at 60 n. 199.

110 With regard to European copyright law see Alexander Peukert, ‘DerSchutzbereich des Urheberrechts und das Werk als öffentliches Gut. Insbesondere: Dieurheberrechtliche Relevanz des privaten Werkgenusses’, in Reto M. Hilty andAlexander Peukert (ed.)(2004), Interessenausgleich im Urheberrecht p. 11, 25 et seq.(explaining how the copyright directive expanded exclusivity to listening, reading, andwatching a work even if the consumer does not acquire a copy of the work).

approach lets one expect that a work is technologically shielded from file shar-ing. This approach is also fruitful with regard to the interpretation of the WCT.A contracting party providing for protection beyond the obligations estab-lished by Art. 11 WCT regarding technological measures (because circumven-tion is also prohibited if the intended uses fall under a limitation/exception tocopyright) may draw upon a more flexible interpretation of Art. 10 WCTregarding the three-step test, as opposed to a contracting party that seeksnarrow limitations to/exceptions from both the legal and the technologicalprotection layer.

Finally, the three-step test is not geared towards single copyright ownersbut instead addresses national legislatures. Right holders have always beenfree to decide to what extent they want to benefit from the exclusivity grantedby law. This freedom is exactly where the bipolar copyright system begins.Right holders may opt for exclusivity and individual licensing (‘hoarding’),but under the bipolar copyright system, they have an additional option: theywould also be able to earn a levy/tax share by accepting certain privileges ofusers, in particular, the non-commercial use of their work in P2P file sharingsystems.111 Seen from this perspective, the bipolar copyright system is noth-ing more than an additional compensation mechanism beyond what is avail-able today. At present, right holders may try to recoup their investment byindividually licensing the use of their work. File sharing is copyright infringe-ment. It is not compensated for if the right holder does not enforce exclusiverights in difficult and expensive litigation in every single case. Under the bipo-lar copyright system, these uncompensated uses would potentially fall underthe levy/tax system and would therefore generate income. It would be up tothe right holder to decide which compensation mechanism promises morerevenues. Therefore, the levy/tax system essentially is not a non-voluntarylicense, but instead a voluntary option.112

It has to be stressed, however, that this discussion relates to the second stepof the three-step test: the bipolar copyright system does not conflict withnormal exploitation of the work. The limitation/exception to exclusive rightsunder the levy/tax system still has to meet the requirements of the first andthird steps. This way, the legal protection layer ‘copyright’ may not beremoved completely. A bipolar copyright system would have to be limited tocertain special cases (first step) and would have to be modelled in a way notto prejudice the legitimate interests of the author (third step).


111 On the lawfulness of the opt-in and opt-out alternatives, see infra‘Compliance with international law’ at p. 182 and ‘Features and benefits’ at p. 181.

112 On the differences to voluntary collective licensing as proposed by the EFF(supra n. 25), Daniel Gervais (supra n. 25) and others, see infra ‘The opt-in modelcompared to collective licensing’ at p. 191.

In summary, the bipolar system rests upon the two pillars, which represent thelayers of today’s copyright protection. One pillar is the law that prohibits thecircumvention of technological protection measures in order to establish exclu-sivity in the digital realm. The other pillar is a limitation/exception that permitsdigital uses (for example, non-commercial file sharing) in the case of the rightholder opting out of the ‘silicon copyright’. The bipolar model (in accordancewith the three-step test) is thus a levy/tax for non-commercial file sharing as analternative to exclusivity based on law and technology. This follows theapproach of William Fisher and Jessica Litman. According to their concepts, thecopyright owner is free to choose ‘hoarding’ instead of ‘sharing’.113

Fischer and Litman suggest the levy/tax system as the statutory default rule,thereby requiring right holders to opt out of the levy/tax system if they preferproprietary exploitation. The pros and cons of this alternative and its compli-ance with international copyright law treaties will be discussed later on in thischapter.

Unreasonable prejudice to the legitimate interests of the right holderBefore these details of the bipolar copyright system can be addressed, onemust still consider the third element of the three-step test. This element setsout that the limitation/exception must not unreasonably prejudice the legiti-mate interests of the right holder.

Only if a non-voluntary license overcomes the first two hurdles must thislast condition be assessed. It establishes a flexible standard of reasonableness,balancing the interests of right holders versus that of the beneficiaries of therestriction to exclusive rights.114 It calls for protection of interests that are‘justifiable’ in the sense that they are supported by relevant public policies orother social norms.115 The crucial questions are whether the interests at stakeare legitimate, and at what point the degree or level of prejudice to the inter-ests of the right holder may be considered ‘unreasonable’.116 The payment ofremuneration under a non-voluntary license may prevent the prejudice fromreaching an ‘unreasonable’ level.117


113 Litman, supra n. 51, at 39–50 (‘sharing’ or ‘hoarding’); Fisher, supra n. 1, at248. For a more detailed discussion of the bipolar system, see infra ‘How a bipolarcopyright system would function’ at p. 175.

114 Ficsor, supra n. 68, at 145; Ricketson, supra n. 68, at 27; Ginsburg, supra n.12, at 57; Senftleben, supra n. 56, at 210–44; Gervais, supra n. 12, at 19–20.

115 Panel Report, Canada-Patent Protection of Pharmaceutical Products, supran. 14, at para. 7.69; Gervais, supra n. 12, at 19–20.

116 Senftleben, supra n. 56, at 226–41.117 German Federal Supreme Court, Gewerblicher Rechtsschutz und

Urheberrecht (GRUR) 963, 967 (2002); Reinbothe and von Lewinski, supra n. 69, Art.10 WCT no. 23; Ginsburg, supra n. 12, at 53; Senftleben, supra n. 56, at 237–41.

Deciding whether a levy/tax system covering P2P networks on a non-commercial scale presents an unreasonable prejudice to the right holders’interest depends, to a large extent, upon the architecture of the system. Itwould obviously present a prejudice to right holders if they were not allowedto technologically prevent file sharing, or if circumvention for the purpose offile sharing were not prohibited.118

Relying on technological measures to exploit works online is a legitimateinterest of right holders,119 as that is just what Arts. 8, 10 and 11 WCT aremeant to facilitate. Whether such an encroachment upon authors’ rights is seenas unreasonable depends on whether national legislatures find that the publicinterests benefited by this regime are equal to the interests of authors,120 andwhether the tax/levy actually compensates for the losses. In that regard, it mustbe observed that the third requirement remains open-ended, leaving it for thenational legislature to strike the balance in particular cases that have passedthe first and second step.121 Considering the positive effects of a levy/taxsystem for the dissemination of knowledge as well as for the compensation ofthe accruing uses, it could certainly be argued that it would be a justified, andnot unreasonable prejudice to the interests of the right holders. However, theproblem with a proposal that restricts both protection layers (copyright andDRM plus anti-circumvention provisions) with regard to file sharing is that itdoes not fulfil the requirements of the second step. Neil Netanel’s concept,therefore, would not survive for consideration of the third step.

As explained above, a tax or levy system as an optional alternative to exclu-sive exploitation in cyberspace, the bipolar system, does not run afoul of thefirst two steps of the three-step test. Regarding the third step, the beneficialeffects of not outlawing P2P technology, improving the dissemination ofknowledge and guaranteeing compensation for authors, justifies the adoptionof this system. The bipolar system does not limit exclusivity as such; it simply


118 This reflects Neil Netanel’s proposal. See supra ‘Non-voluntary licensesregarding P2P file sharing’ at p. 154.

119 In this regard, it is important to determine whether only the interests of theauthor count or also the interests of intermediaries as derivative right holders; seeReinbothe and von Lewinski, supra n. 69, Art. 10 WCT no. 8 (safeguarding of invest-ments of intermediaries is an aspect to be considered in applying Art. 10 WCT);Senftleben, supra n. 56, at 216–21.

120 The dominant opinion prioritizes author’s rights v user’s interests; see e.g.Guibault, supra n. 36, at 90–110; Reinbothe and von Lewinski, supra n. 69, Art. 10WCT no. 8 (referring to the preamble of the WCT that speaks of ‘rights of authors’ butonly of the public ‘interest’); contra Geiger, supra n. 35, paras. 225–26 (regarding limi-tations justified by fundamental rights); CCH Canadian Ltd. v Law Society of UpperCanada, 2004 SCC 13 (Supreme Court of Canada 2004), paras. 12, 48 (finding that fairdealing is a right of users).

121 Ricketson, supra n. 68, at 26.

offers right holders an additional business model to generate income from usesof their work in cyberspace. The mere necessity of making a choice betweenthe two alternatives cannot be said to be a ‘prejudice’ to the legitimate inter-ests of right holders because it is nothing other than an everyday business deci-sion. This illuminates the fact that limiting only one protection layer(copyright) to a mere remuneration right and leaving the other layer (DRMplus anti-circumvention rules) untouched is consistent with international copy-right law. In any event, the levy/tax revenue must be sufficiently high to atleast arguably substitute for a potential exclusive exploitation on the basis ofDRM in cyberspace.122

Agreed Statement to Article 10 WCT

The previous analysis has revealed that it is more than doubtful whether, forexample, Neil Netanel’s ‘noncommercial use levy’ for P2P file sharing fulfilsthe obligations laid down in international copyright law because this levy alsodenies the right holder the option of individual licensing using DRM. A differ-ent view could be derived from the Agreed Statements regarding Art. 10WCT,123 which reads:

It is understood that the provisions of Article 10 permit Contracting Parties to carryforward and appropriately extend into the digital environment limitations andexceptions in their national laws, which have been considered acceptable under theBerne Convention. Similarly, these provisions should be understood to permitContracting Parties to devise new exceptions and limitations that are appropriate inthe digital network environment.124

The delegations that proposed this statement wanted to express concerns thatthe three-step test might become a straightjacket for adopting limitations andexceptions in the digital environment.125 It is worth noticing the differencesbetween the two sentences: whereas the first sentence corresponds to alreadyexisting restrictions and the digital environment in general, the secondsentence, dealing with new exceptions/limitations, relates to the digitalnetwork environment and thus to the Internet context addressed by this article.


122 For a discussion of the amount of tax/levy due, see Fisher, supra n. 1, at205–15; Netanel, supra n. 23, at 44–52.

123 Since it applies to both paragraphs of Art. 10 WCT, it not only relates to therights provided for in the WCT (especially the right of communication to the public,Art. 8 WCT), but also to the rights granted under the BC (the reproduction right).

124 For a discussion on the relevance of the Agreed Statements with regard to theapplication of the three-step test in general, see Ricketson, supra n. 68, at 62.

125 For the remarks of the delegations of the USA, Denmark, India, and theUnited Kingdom, see Ficsor, supra n. 75, at 5.137.

Does this statement thus constitute a charter for contracting parties to devisenew exceptions and limitations in the digital network environment withouttaking account of the three-step test?

For a number of reasons, the answer has to be in the negative. One of themain goals of the WCT was to establish a new, exclusive ‘Internet right’ as aminimum right in international law. It would be inconsistent with this purposeto read the agreed statement as giving contracting parties discretion to restrictexclusivity in the digital network environment as they see fit. Had thecontracting parties wanted to exclude online uses from the three-step test, theywould have done so in the treaty. Finally, since the reproduction right is alsosubject to Art. 13 TRIPS, which does not contain a similar statement, thisinterpretation would produce a severe discrepancy in international copyrightlaw in general. Thus, the statement has to be understood, not as a broadenabling clause, but as a clarification that exceptions and limitations mayindeed be adopted in the digital network environment126 and that they still aresubject to the three-step test.127

HOW A BIPOLAR COPYRIGHT SYSTEM WOULDFUNCTION

Complexity of the System

A fundamental reservation against a bipolar copyright system for the digitalnetwork environment is its complexity.128 Even without going into the detailsof how the freedom of the right holder to choose between those two alterna-tives might be accomplished in practice, it is certain that it would involveconsiderable effort to establish and organize the system. It is certainly true thatthere are less complex answers to the digital dilemma.129 For example, ashorter term than life plus 50 or even life plus 70 years would flush many


126 Ficsor, supra n. 75, at C10.10 (correlating the statement to limitations andexceptions justified specifically in view of the digital network environment, e.g.temporary reproductions).

127 Reinbothe and von Lewinski, supra n. 69, Art. 10 WCT no. 33; Ficsor, supran. 75, at C10.09; Sirinelli, supra n. 12, at 42; Ricketson, supra n. 68, at 63 (‘If a distinctregime for new limitations and exceptions is envisaged under the WCT, this wouldneed to be the subject of an express provision of that treaty.’).

128 For a discussion on a necessary ‘new simplicity’ in dealing with copyright, seeStefan Bechtold, Das Urheberrecht und die Informationsgesellschaft, in Reto M. Hilty andAlexander Peukert (2004) (ed.), Interessenausgleich im Urheberrecht, p. 67, pp. 84–86.

129 For the definition of the term ‘digital dilemma,’ see supra ‘Introduction’ at p.148.

works into the public domain without significantly diminishing the incentiveof authors to create new works. A similar result could perhaps be achieved byrequiring registration for the renewal of the copyright term.130

The problem with these proposals is – and that brings us back to the aim ofthis paper – that they require the amendment or abrogation of internationalcopyright treaties.131 It has been pointed out that these steps are extremelydifficult to achieve or simply unrealistic on a political level.132 It is thereforereasonable to seek a solution that is superior to the logjam we have right nowwithout conflicting with Berne, TRIPS or the WIPO Treaties. One proposalthat fulfils this fundamental requirement and looks for middle ground in thebattle over copyright in the digital network environment is a streamlinedenforcement mechanism as outlined by Lemley and Reese.133 Another optionwould be a voluntary collective management system as suggested by the EFFand others.134 However, as long as these solutions are not adopted and havetherefore not yet proven that they actually solve the problems they aresupposed to address, it is worth asking what a bipolar copyright system wouldlook like – in spite of its complexity.

Switching Between Individual Licensing and the Levy System

Does the choice make sense?The most important feature of the bipolar system is that the right holder mayfreely choose between exclusive, proprietary exploitation on the basis of DRM(‘hoarding’) or participating in the levy/tax system (‘sharing’) as regards non-commercial file sharing. One of the advantages of this system is that the deci-sion must be made for every single subject matter by the copyright owner


130 See Lessig, supra n. 32, at 251–52; William M. Landes and Richard A. Posner(2003), ‘Indefinitely Renewable Copyright’, 70 U. Chi. L. Rev. 471, 476; Epstein,supra n. 1, at 33–37; Public Domain Enhancement Act, H.R. 2601 108th Cong. (2003),available at http://thomas.loc.gov/cgi-bin/query/z?c108:H.R.2601:.

131 For the duration of copyright, see Art. 7 BC, Art. 12 TRIPS. For the formali-ties of copyright, see Art. 5(2) BC.

132 See supra ‘Introduction’ at p. 149. In the end, national lawmakers have tomake a choice between negotiations on a political level to amend international copy-right law, and systems like the bipolar copyright system that do not require changes ofinternational law. Complexity is involved in either strategy. It only relates to differentaspects, that is, politics on the one hand and the legal and technological architecture ofthe approach in line with current international copyright law on the other (be it a bipo-lar copyright system or a streamlined enforcement mechanism).

133 Supra n. 30. The authors also think it possible that their proposed systemcould be part of a levy system, be it on an opt-in or opt-out basis; id. at 1424.

134 See supra ‘Non-voluntary licenses regarding P2P file sharing’ at p. 154.

according to the particular circumstances of each case. No governmentalagency is involved. It is thus a market-based, decentralized concept. To leavethe choice to the right holder recognizes self-determination as a core value ofcopyright in general.

The following examples are meant to show that it makes sense to provide forboth alternatives in the digital online environment. In doing so, one has to distin-guish between two scenarios. Either the choice will be made at the time of firstpublication of the work, or the copyright owner withdraws the work from onesystem and releases it into the other after the time of first publication.

Decision at the time of first publication A recognized artist who has alreadyhad some commercial success may decide in favour of the proprietary systemjust as it is today – unauthorized use of his or her works in P2P networksinfringes the copyright in the works. To increase the probability that possibleinfringers actually face consequences, a streamlined enforcement procedure asproposed by Lemley and Reese135 might be advisable.

The situation is completely different if a newly created work does notpromise commercial success.136 This might be the case if the author is not yetknown to the public,137 or the work is geared at a very small market for whichthere is not yet an intermediary offering commercial distribution. In thesescenarios, the author does not and cannot expect significant revenue from theproprietary system. Authors often do not find an intermediary who will agreeto handle commercial exploitation. In this situation, the levy/tax system willbe much more appealing. The work, once produced and ready for distributionas a digital file in P2P networks, can be registered as eligible for distributionof the tax/levy. It is then up to the author or a commercial supplier of thisservice to promote the work among potential consumers. To this end, theInternet and modern technologies, especially preference-matching engines,138


135 Supra n. 30.136 The distinction between popular works and less popular works also plays a

role in the discussion on the optimal level of DRM protection. See Jeevan Jaisingh(2004), ‘Piracy on File Sharing Networks: Strategies for Recording Companies’, avail-able at http://ssrn.com/abstract=567681, 19 (stating that ‘protecting the latest album byMichael Jackson or the latest Lord of the Rings (movies and artists which already do,or are more likely to create a “buzz”) makes more sense than protecting an album,which is less likely to be popular.’).

137 See MGM, 380 F.3d 1154, 1161 (9th Cir. 2004) (‘Indeed, the record indicatesthat that thousands of other musical groups have authorized free distribution of theirmusic through the Internet.’); MGM, 125 S.Ct. 2772 (‘Some musical performers . . .have gained new audiences by distributing their copyrighted works for free across peer-to-peer networks. . .’).

138 See Lessig, supra n. 32, at 132–34.

provide promising tools for cost-effective promotion, lowering the barriers toentering the market. The interested user may download and redistribute thework without being obliged to pay for every use directly.139 Instead, thecreator receives a share of the levy/tax according to the use of the work asmonitored by technology. Thus, failing to get a contract in the entertainmentindustry does not automatically mean that authors must offer their work ‘forfree’. Instead, simply by opting for the other business model, authors still havethe possibility to earn money from their creations. It should be added that thelevy/tax system can be attractive not only for newcomers or artists who createworks for markets too small to be served by intermediaries of today. For exam-ple, a newly released album may be promoted with a pre-released single thatis registered for the levy/tax system and then lawfully and unrestrictedly‘shared’ in P2P networks. If the song proves successful, it can afterwards beexploited in the proprietary system together with the rest of the album andadditional material such as video sequences.

Switch-over from one system to the other The last example gives rise to thesecond scenario, which is much more difficult to handle. Until now, this chap-ter has only dealt with works that are deliberately channelled into either theproprietary or the levy/tax system at the time of first publication. Are therecases imaginable where the copyright owner would decide to switch from onesystem to the other?

The first variant under this switch-over scenario is where the authorinitially chose proprietary exploitation on the basis of DRM. If it becomesclear that there will not be significant additional revenue from exclusiveexploitation – be it because consumers did not like the work or because thecommercial life cycle of the work has already passed – the copyright ownercan at least try to gain additional revenue by registering the work and makingit freely available in P2P networks.140 The author is thereby able to reachconsumers who are not willing to pay for the song or other work on an indi-vidual basis. The levy/tax system can thus form part of a strategy that relies onprice discrimination.141 To offer the work for non-commercial file sharing, not


139 This is the approach of the so-called Potato System, which was developed bythe German Company ‘4FO AG’ together with the Fraunhofer-Institute for DigitalMedia Technology IDMT in Ilmenau, Germany; see http://www.potatosystem.com/info/eng/index.html.

140 The copyright owner may still try to sell copies of the work. While commer-cial online ventures will face significant competitive pressure from the freely availableversions in P2P networks, CDs and other offline mediums may still be successfullyoffered.

141 There is no considerable risk that consumers will willfully abstain from

to require direct payment for such uses, and to still receive revenue is an alter-native business model not available today.

Moreover, the fact that this switch to the levy/tax system will often takeplace after a certain period of proprietary exploitation reflects current criti-cisms of the copyright term. In many jurisdictions, copyright currently lasts 70years post mortem auctoris.142 It is rightly argued that such a long copyrightterm, compared to a copyright term of 50 years p.m.a. or even shorter terms,does not generate economic incentives meaningful for initial creativity.143 AsJustice Breyer put it in his dissenting opinion in Eldred v Ashcroft, ‘no poten-tial author can reasonably believe that he has more than a tiny chance of writ-ing a classic that will survive commercially long enough for the copyrightextension to matter. After all, if, after 55 to 75 years, only 2 per cent of allcopyrights retain commercial value, the percentage surviving after 75 years ormore (a typical pre-extension copyright term) must be far smaller.’144 Thebipolar copyright system can be understood as a flexible answer to that prob-lem. Releasing works into P2P networks after an initial exploitation in propri-etary systems gives users nearly as much freedom as with works in the publicdomain. In addition, to provide for a significantly shorter copyright termwould again require the amendment of international copyright law. Finally, nostatutory modification of the copyright term would ever make it possible toconsider the commercial life cycle of each work individually. This, however,is just what the bipolar copyright system does.

At first glance, it seems that the second variant of the switch-over scenario,to switch from the levy/tax system to the proprietary system, is not likely to beof practical relevance. After all, digital files of the unportected work are avail-able in P2P networks. Given the current state of the art, it would hardly bepossible to prevent further use of these files technologically. The Groksterdecision of the Ninth Circuit Court, however, offers a telling example that


purchasing or licensing copies of newly released songs or movies because they hopethat these works will soon be available in P2P networks, as cultural works exert consid-erable attraction on consumers if they are – admittedly, for a limited period of time – a‘must-have.’ Think, for example, of number one hits or movies that consumers simplyhave to know in order to be able to take part in everyday conversation. This notionrelates particularly to younger consumers.

142 See, for example, 17 USC § 302(a); Art. 1(1) Council Directive 93/98, 1993OJ (L290) 9-13 (EC).

143 See Eldred v Ashcroft, 123 S.Ct. 769, 792–93 (Stevens, J., dissenting), 808(Breyer, J., dissenting) (2003).

144 Id.; Lessig, supra n. 32, at 292–94; for a European perspective on Eldred seeReto M. Hilty (2003), ‘Eldred v Ashcroft: Die Schutzfrist im Urheberrecht – eineDiskussion, die auch Europäer interessieren sollte’, Gewerblicher Rechtsschutz undUrheberrecht International (GRUR Int.), 201–204.

teaches the opposite. Explaining why the P2P software at issue was ‘capableof substantial’ or ‘commercially significant noninfringing uses,’ the courtstates:145

One striking example provided by the Software Distributors is the popular bandWilco, whose record company had declined to release one of its albums on the basisthat it had no commercial potential. Wilco repurchased the work from the recordcompany and made the album available for free downloading, both from its ownwebsite and through the software user networks. The result sparked widespreadinterest and, as a result, Wilco received another recording contract.

Thus, experience shows that proprietary exploitation is not at all eliminated ifthe respective work has already been available in P2P networks in an unpro-tected digital format. The strategy to exclusively commercialize such workscould become even more attractive under the bipolar copyright system. First,the proprietary system could be strengthened by an improved enforcementsystem on the Internet in order to deter users from further ‘sharing’.146

Second, the monitoring technology that counts lawful uses in P2P networkscould also be employed to curtail file sharing. For example, one could imag-ine an automatic indicator that the work is no longer available for ‘free’ if auser wants to stream or download a work after withdrawal. It should be addedin this context that one important consequence of the differentiated approachof the bipolar copyright system may well be that consumers would be morelikely to respect copyright enforcement if it applies only to commercially valu-able works, and not to potentially any content available.147 In any event, itwould be up to the copyright owner to take the risk. Again, new businessmodels and improved offers (for example additional versions of a song, etc.)may help to make this strategy valuable.148


145 MGM, 380 F.3d 1154, 1161 (9th Cir. 2004). The Supreme Court did not referto this example expressly but stated that ‘some musical performers . . . have gainednew audiences by distributing their copyrighted works for free across peer-to-peernetworks . . .’; MGM, 125 S.Ct. 2764, 2772 (2005). Justice Ginsburg declared that‘there has been no finding of any fair use and little beyond anecdotal evidence ofnoninfringing uses’; id. at 2785.

146 See Lemley and Reese, supra n. 30.147 Litman, supra n. 51, at 49.148 One could even consider allocating, for a certain period of time, a fraction of

the money due under the levy/tax system to the copyright owner after the work hasbeen withdrawn to account for the ongoing uses. This option, however, has severe legalpitfalls. In the end, the uses are unlawful. After the work has been withdrawn, uploadsand downloads infringe the copyright in the work. They can be prevented by exercis-ing exclusive rights. If the copyright owner fails to do so, it does not seem justified tonevertheless assign his or her shares of the levy/tax revenue.

These examples show that both systems will be used for different classes ofworks. While some works will be exploited (often for a limited time only) incommercial online ventures, others will from the time of first publication beavailable for non-commercial file sharing in P2P networks. The questionremains, however, as to which system should or must form the legal default.Two alternatives are imaginable. In the first, the levy/tax system is the legaldefault and the copyright owner must opt out of it. This is the variant proposedby Jessica Litman and William Fisher. Alternatively, exclusivity is the rule andthe right holder may deliberately opt into the levy/tax system. The followingsection addresses both alternatives, again emphasizing the question of whetherboth approaches are in line with international copyright law.

Opting Out of the Levy/tax System

Features and benefitsThe first alternative to be considered here is the opt-out model. According tothe suggestions of Jessica Litman and William Fisher, the levy/tax systemshould be the legal default.149 Any work still under copyright and every newlypublished work would fall under the new limitation from or exception toexclusive rights, and would at the same time be eligible for shares of thelevy/tax, unless the right holder opted for exclusivity on the basis of DRM.With regard to new works, Litman proposes a notice-based opt out mecha-nism. In order to inform consumers that a particular work does not fall underthe levy/tax system, the copyright owners would have to release the work in a‘*.drm’ format.150 The right holders would lose any claims under the levysystem. Additionally, they would have to take affirmative steps to excludetheir work from the network and ‘enable consumers to quickly and painlesslyascertain that those works may not lawfully be shared.’151 For works that havealready been released in another, free, format, Litman would make it evenmore burdensome to withdraw a work from ‘sharing’.152 Without explaining


149 See Litman, supra n. 51, at 45 et seq.150 Litman, supra n. 51, at 46–47.151 Id. at 45.152 See Litman, supra n. 51, at 48:‘All owners of the copyright in the work, as well as the work’s creators, would berequired to join in the decision to withdraw. First, the copyright owners would needto recall copies of the work released in formats other than *.drm, and offer anyconsumers who own authorized, commercial copies in a non-*.drm format theopportunity to swap those copies for *.drm copies at no charge. Second, the lawshould incorporate a 24-month grace period before any withdrawal of a work couldtake effect. (In the meantime, withdrawn works could collect payments from thecommon fund.) Finally, in order to recover in an infringement suit for consumer-to-

how the implementation of technological measures and privileged uses underthe alternative compensation system relate to each other, Fisher would allowthat a copyright owner ‘opted out of the tax system entirely, releasing only anencrypted version of his or her recording.’153

Obviously, this concept aims at encouraging ‘sharing’ instead of ‘hoard-ing’.154 It thus relies on the positive effects of levy/tax systems. Moreover, itaccepts that virtually every work published today can be accessed in P2Pnetworks, and that many works are not commercialized and are instead releasedfor free on the Internet.155 If ‘sharing’ is the default today, Litman reasons, itshould be the default of tomorrow. It would simply be transformed from illegaluse to lawful and compensated use. One final aspect of Litman’s proposal thatshould not be underestimated: a tax or levy system would be imposed upfronton services and devices in use for file sharing. It would not be collected on anindividual basis, as under a collective license where the user or the facilitatorhas to pay according to the number of works actually being used or at leastavailable for use in the network.156 The imposition of a levy/tax high enoughto generate funding that encourages authors to choose the levy/tax system canhardly be justified if there are only very few works registered for lawful use inP2P networks. The opt-out model would make sure that all copyrighted worksare presumptively legally available for up- and download. It would thus providethe prospect of something of value for the society at large. Without thisprospect, there will be strong resistance against the adoption of a levy/taxsystem as a mere alternative to exclusive exploitation.

Compliance with international copyright lawHowever, there are severe doubts whether this concept is in accordance withinternational copyright law, for two main reasons.

First, one must ask whether exclusivity as only the secondary option is stillin line with the three-step test. As already outlined, the bipolar copyrightsystem as such arguably complies with this treaty obligation because it simply


consumer dissemination of a withdrawn work, the copyright owner would need toshow knowledge that the work had been withdrawn.’153 Fisher, supra n. 1, at 247–48.154 Litman, supra n. 51, at 41; Fisher, supra n. 1, at 237.155 See MGM, 380 F.3d 1154, 1161 (9th Cir. 2004) (‘Indeed, the record indicates

that that thousands of other musical groups have authorized free distribution of theirmusic through the Internet.’); MGM Studios, Inc. v Grokster Ltd., 125 S.Ct. 2764, 2772(2005) (‘Some musical performers . . . have gained new audiences by distributingtheir copyrighted works for free across peer-to-peer networks . . .’); see also id. at 6(Breyer J., concurring) (explaining the significant future market for non-infringing usesof Grokster-type peer-to-peer software).

156 Fisher, supra n. 1, at 252.

offers the right holder an additional business model. Exclusivity in cyberspaceis limited only insofar as copyright is one of the two layers of exclusivity avail-able to the right holder. The other option, that is, exclusive exploitation based onDRM systems, remains unaffected. What has not yet been answered, however,is whether exclusivity has to be the legal default under the three-step test.

Second, if the right holder has to opt out of the levy/tax system in order toenjoy full exclusivity, it could be argued that this model establishes a formal-ity requirement.157 Article 5(2) BC reads that ‘[t]he enjoyment and exercise ofthese rights shall not be subject to any formality. . . .’ The formulation ‘theserights’ refers to paragraph 1 of Article 5 BC, which provides that ‘authors shallenjoy, in respect of works for which they are protected under this Convention,in countries of the Union other than the country of origin, the rights whichtheir respective laws do now or may hereafter grant to their nationals, as wellas the rights specially granted by this Convention’.158

As both the TRIPS Agreement and the WCT stipulate that contractingparties have to comply with Articles 1 through 21 of the Berne Convention,the prohibition of formalities has to be observed by parties to these treaties aswell.159 An alleged violation of this obligation is consequently subject to WTOdispute settlement proceedings. Moreover, these references entail that not onlythe right of reproduction according to Art. 9 BC must not be subject to formal-ity requirements, but also that the right of communication to the public,including the right of making works available to the public under Art. 8 WCT,must not be subject to formality requirements. These rights are minimumrights granted by the Berne Convention and the WCT. They are thus ‘rightsspecially granted’ under these treaties, so their enjoyment or exercise must notbe subject to formalities.160 In order to establish a levy/tax system where‘sharing’ is the legal default rule, however, the right of reproduction and the


157 See Litman, supra n. 51, at 46 n. 166.158 Historically, the acts of the Berne Convention moved away from formality

requirements for copyright protection. Article 2(2) of the 1886 act provided that ‘theenjoyment of these rights shall be subject to the accomplishment of the conditions andformalities prescribed by law in the country of origin of the work. . . .’ It was only atthe 1908 Berlin Conference that this requirement was abolished. Article 4(2) BC 1908already had the same wording as Art. 5(2) of the current version. The 1967 StockholmConference simply rearranged the legal material in Arts. 4 to 6. It did not alter Art. 4(2)but simply gave it a new number, Art. 5. See Ricketson, supra n. 73, at 5.82; FritzSchönherr (1981), ‘On the Interpretation of Article 5(2) of the Berne Convention,Taking as an Example the Greek Antipiracy Law of July 15, 1980’, Copyright 295–97;Alfred Baum (1932), ‘Berner Konvention, Landesgesetze und internationalsPrivatrecht’, Gewerblicher Rechtsschutz und Urheberrecht (GRUR ) pp. 923–27.

159 See Art. 9 (1) TRIPS (excluding Art. 6bis BC), Art. 1(4) WCT.160 Wilhelm Nordemann, Kai Vinck and Paul W. Hertin (1990), International

Copyright and Neighboring Rights Law, Art. 5 BC no. 6.

right of communication to the public would be limited with regard to non-commercial file sharing unless the right holder fulfills certain requirements.

The three-step test and the prohibition of formalities are closely related toeach other. If exclusivity has to be the default under the three-step test, the opt-out mechanism can well be said to act as a formality requirement. If not, theright holder would in principle161 enjoy automatic protection under thelevy/tax system without further conditions or formalities. In this latter case,Art. 5(2) BC would not be violated by this solution. To explain this distinction,one must look to the general goals of the convention and the relevant provi-sions, because there is no precedent for an opt-out mechanism under a bipolarcopyright system. The idea of two layers of exclusivity that are treated differ-ently was not known in 1971, the year of the last amendment of the BerneConvention.

To begin with, it can certainly be argued that the necessary acts for optingout of the levy/tax system are formalities under Art. 5(2) BC. Jessica Litmansuggests that the work would have to be published in a certain *.drm formatand that the right holder would have to take care that consumers are informedabout this choice. One could alternatively imagine a notice with the competentauthority that the work shall not be lawfully available for file sharing.162 Bothrequirements are state-required, formal preconditions, similar to the notice andregistration system under former US copyright law, which was one of themajor obstacles to the US joining the Berne Convention.163 This is obvious inthe case that a declaration or registration is necessary.164 It also holds true forthe requirement to use a digital format (*.drm). While one might questionwhether this requirement is a ‘formality,’ it certainly can be said to impose a‘condition’ in a more general sense that has to be complied with in order toensure that the work does not fall under the limitation/exception for non-commercial file sharing.

Originally, Art. 2(2) of the 1886 Berne Act referred to formalities andconditions. ‘Conditions’ meant material requirements such as providing a


161 It has to be noted that naturally only those right holders can receive a share ofthe incurred levy/tax who register their work with the competent authority that distrib-utes the money.

162 See Fisher, supra n. 1, at 242 (discussing an opt-out mechanism as regards thepreparation of derivative works).

163 See 17 USC § 401(a); Nordemann et al., supra n. 160, Art. 5 BC no. 7.164 Other formalities are the obligation to affix a copyright symbol and to make

a legal deposit of money or a copy of the work under penalty of losing rights. SeeDaniel Gervais (2003), ‘Application of an Extended Collective Licensing Regime inCanada: Principles and Issues Related to Implementation’, Study Prepared for theDepartment of Canadian Heritage, available at http://www.canadianheritage.gc.ca/progs/ac-ca/progs/pda-cpb/pubs/regime/regime_e.pdf, 19; Ricketson, supra n. 73, at5.83; Nordemann et al., supra n. 160, Art. 5 BC no. 7.

translation of the work in the language of the country where protection wassought.165 When the need to comply with conditions and formalities was abol-ished at the 1908 Berlin Conference, the term ‘conditions’ in the new provi-sion 4(2) was deleted as well. The documents of the conference, however,show that the delegations understood the new wording ‘formalities’ as cover-ing both the ‘conditions and formalities’ referred to in the 1886 Act.166 Thus,the requirement to use a certain format for publication in order to enjoy exclu-sivity in cyberspace is also a ‘formality’ under Art. 5(2) BC.167

With this insight, however, the interpretation of Art. 5(2) BC is notcomplete. The second element of this provision is that the enjoyment or exer-cise of the right of reproduction and the right of communication to the publicas minimum rights under the named conventions be subject to the formality.The necessity of addressing this element separately becomes obvious in lightof a statement at the Diplomatic Conference of 1884 that explains the mean-ing and reach of the provision. During the discussion, one of the German dele-gates put forward an interpretation that was approved by the Conference andwas reproduced verbatim in the Conference records. According to the state-ment of Dr. Meyer, ‘the words “formalities and conditions” comprise every-thing which must be complied with in order to ensure that the rights of theauthor with regard to his work may come into existence [in German:“Voraussetzungen”], while the effects and consequences of protection [inGerman: “Wirkungen”], in particular the extent of that protection, shouldremain subordinated to the principle of treatment equal with nationals.’168 Aswas already shown, the current version of Art. 5(2) BC can be traced back toArt. 2(2) of the 1886 Act.169 Hence, the distinction between prohibited formal-ities relating to the genesis of the right, and formalities that concern only thescope of copyright is still valid for the interpretation of the provision.170

Adopting this reading of Art. 5(2) BC, it could be argued that the opt-outmechanism establishes only a formality requirement as regards the scope ofcopyright, in Dr. Meyer’s words the consequences of protection, but not itsgenesis. As a result, these formalities would not fall under Art. 5(2) BC andwould therefore not conflict with this international obligation. For example, it


165 Ernst Röthlisberger (1906), Die Berner Übereinkunft zum Schutze von Werkender Literatur und Kunst und die Zusatzabkommen, p. 101.

166 Ricketson, supra n. 73, at 5.83.167 The same holds true for other requirements Litman proposes. See Litman,

supra n. 51, at 48.168 Ricketson, supra n.73, at 5.82.169 See supra ‘Compliance with international copyright law’ at p. 182.170 See Ricketson, supra n. 73, at 5.83; Masouyé, supra n. 87, at 35; Nordemann

et al., supra n. 160, Art. 5 BC no. 7; see also Baum, supra n. 158, at 927 for furtherreferences.

is held that Art. 5(2) BC does not apply171 to provisions in national copyrightlaw that grant a longer copyright term for pseudonymous works if the authorregisters his or her true name in a register for authors172 or if the law providesfor a presumption in favour of the person who is designated as author on acopy of the work.173 Similarly, the opt-out mechanism does not deprive theauthor of copyright protection completely. Copyright still comes into existencewithout any formalities. Only with regard to non-commercial file sharing isthe legal default not exclusivity, but a levy/tax system, which still generatesincome for the author. True, copyright owners still have to register their workwith the competent authority in order to actually have the prospect of receiv-ing a share of the accrued money. But this could be said to be a mere factualnecessity.174 It is not required by law. Basically, the protection under thelevy/tax system is afforded without any formalities.

Moreover, it has to be kept in mind that the bipolar copyright system isgenerally admissible under the three-step test. A national copyright law estab-lishing this model could thus be said to grant authors the minimum rightsunder Berne. If this is true, both pillars of the bipolar system are valid defaultrules. Art. 5(2) BC would only prohibit both layers of protection beingsubjected to formalities. Therefore, if right holders opt for exclusivity, theyare, according to this view, only extending the scope of copyright protection,just like authors of pseudonymous works who register their true names toenjoy the full copyright term.


171 See Ricketson, supra n. 75, at 5.82; Röthlisberger, supra n. 165, at 108;Baum, supra n. 158, at 928; Willy Hoffmann (1935), Die Berner Uebereinkunft zumSchutze von Werken der Literatur und Kunst 92; Schönherr, supra n. 158, at 297.

172 See, e.g., Sec. 66(2) German CA.173 See, e.g., Sec. 10(1) German CA: In the absence of proof to the contrary, the

person designated in the customary manner as the author on copies of a work whichhas been published or on the original of a work of fine art shall be deemed the authorof the work; the same shall apply to a designation which is known as the author’s pseu-donym or the artist’s mark.

174 For a discussion on the contrary view and the duty of the competent authorityto search for authors who did not register, although their works are being shared, seeinfra n. 183. It is furthermore interesting in this context that the ‘extended collectivemanagement’ of exclusive rights by collecting societies is said to be in line with Art. 5(2)BC. Extended collective management of rights means that national copyright law entailsa presumption in favour of collecting societies. According to this presumption, allauthors whose works are actually used under the collective licensing scheme grantrights, even if this is true only for a substantial number but not all authors. Without thispresumption, smaller collecting societies would not be able to offer a comprehensiverepertoire for users. Authors are therefore obliged to expressly object to this administra-tion of their rights in order to regain control over the exercise of their exclusive rights.See Gervais, supra n. 164, at 19; Gervais, supra n. 4, at 72.

Finally, the formalities proposed for opting out of the levy/tax system donot relate to the exercise of the exclusive rights. With exercise, Art. 5(2) BCrefers to the enforcement of copyrights, that is, to the remedies available in thecase of an infringement. For example, the bringing of proceedings or theaward of damages must not be dependent on formalities or conditions.175 Theformalities at stake here do not centre on infringement and remedies, butprimarily on the enjoyment of rights. Additionally, the whole idea of a bipolarcopyright system strongly implies a choice to be made by the right holder. Thischoice has to be expressed and registered in some form to give the public, orat least the competent authority, notice about the status of the work. If ‘exer-cise’ of rights were to cover this notification, even a system that starts fromexclusivity and provides for a voluntary opt-in mechanism as regards thelevy/tax system would not comply with Art. 5(2) BC. Even the requirement tofile written documents in order to institute an infringement proceeding wouldrun afoul of the Berne Convention. Obviously, this cannot be true. A formal-ity requirement as to the exercise of rights has to impose additional obstaclesnot necessarily inherent in the copyright system.

For the following reasons, however, these arguments in favour of an opt-outmechanism as the default are unconvincing. First and most importantly, it has tobe restated that the bipolar copyright system is also subject to the three-step test.The arguments above only help to avoid a conflict with the second step, that is,the normal exploitation of the work in the digital network environment. The firstand third step still have to be observed. From this it follows that a bipolar copy-right system has to be confined to certain special cases (non-commercial filesharing), and that the levy or tax has to compensate the privileged uses in ordernot to cause an unreasonable prejudice to the legitimate interests of the rightholder. If it is true that the three-step test applies, its primary purpose has to beobserved. This fundamental goal is to guarantee certain minimum exclusiverights in works, and to confine the scope of limitations to or exceptions fromexclusive rights in national copyright law. The bipolar copyright system alreadydowngrades exclusivity to an alternative, on par with a mere right to remunera-tion under a levy/tax system. This right to remuneration relies onlimitations/exceptions to copyright, which would conflict with the normalexploitation of the work if the copyright owner did not have the option to chooseexclusivity. A paradigm shift like this only conforms with the purpose of thethree-step test if exclusivity at least forms the statutory default rule.

Second, this consideration can be rested upon the evaluation of other caseswhere the copyright owner is obliged to fulfil formalities in order to enjoyexclusivity. One example can be found in the BC itself. Art. 10bis(1)(1) reads:


175 Ricketson, supra n. 73, at 5.84.

It shall be a matter for legislation in the countries of the Union to permit the repro-duction by the press, the broadcasting or the communication to the public by wireof articles published in newspapers or periodicals on current economic, political orreligious topics, and of broadcast works of the same character, in cases in which thereproduction, broadcasting or such communication thereof is not expressly reserved[emphasis added].

The emphasized qualification enables right holders to avoid the limitation. Inorder to enjoy exclusivity, they have to expressly reserve their rights. UnderGerman copyright law, the statement ‘all rights reserved’ has to be expressedin connection with every single published article.176 Obviously, this solutionbears great resemblance to the bipolar copyright system, and particularly to theopt-out model as proposed by Jessica Litman. Ricketson and other commen-tators, however, reason that Art. 10bis (1) BC contains a formality requirementin that the genesis of the exclusive right at stake depends upon making anexpress reservation.177 They argue that it is justified only because it isacknowledged in the convention itself as a lex specialis to Art. 5(2) BC.178

Another situation similar to the opt-out model is mandatory or extendedcollective licensing, where the authors must withdraw their rights from thecollecting society in order to handle their rights individually. Again, theauthors have to either make a declaration or fulfil other conditions to enjoyexclusivity. However, mandatory collective licensing is found to be in conflictwith the three-step test if it pertains to exclusive rights179 or, at any rate, if thecollecting society is required by law to grant exploitation rights or authoriza-tions to any person so requesting.180 In the latter case, the exclusive rights arein fact reduced to a mere right to remuneration administered by a collectingsociety.181 This, however, is exactly the case under the opt-out model where


176 See Ferdinand Melichar in Gerhard Schricker (ed.), Urheberrecht, Sec. 49German CA no. 10.

177 Hoffmann, supra n. 171, at 91.178 Ricketson, supra n. 73, at 5.85.179 See Schönherr, supra n. 158, at 295 with further references; Nordemann et al.,

supra n. 160, Art. BC no. 77.180 This is the case according to the German ‘Law on the Administration of

Copyright and Neighboring Rights (Copyright Administration Law)’. According toSec. 11 of the Copyright Administration Law, ‘[C]ollecting societies shall be requiredto grant exploitation rights or authorizations to any person so requesting on equitableterms in respect of the rights they administer.’

181 See von Lewinski, supra n. 37, at 5 (‘The mandatory collective administrationhowever does not affect the exclusive right itself; the covered uses are not authorizedby law. Rather, the author is only restricted in the options of exercising the right: he isleft with the only possibility to exercise the exclusive right through the collecting soci-ety, whereas the right itself is not limited as such, in particular not in favor of any suchinterest of the public at large.’); contra Gervais, supra n. 4, at 72.

participation in the levy/tax system is the statutory default. Taken together,these examples demonstrate that the Berne Convention has been interpreted asobliging national copyright laws to vest the author with exclusive rights as thestatutory default rule. A diverging subsequent practice in the application of thetreaty cannot be ascertained.182

It should finally be added that right holders have to register their workswith the competent authority in order to actually participate in the levy/taxsystem. Thus, even the statutory default under the opt-out model requirescompliance with formalities.183

SummaryIn summary, the opt-out model as suggested by Jessica Litman and WilliamFisher is a state-required formality for the enjoyment of minimum exclusiverights. It is thus not in line with Art. 5(2) BC, as international copyright lawpersists in the notion of exclusive rights, even in the digital network environ-ment. These exclusive rights must come into existence without further formal-ities as the statutory default. To provide for exclusivity only under thecondition that the right holder opts out of a levy/tax system does not meet thisrequirement.

The only way to go forward would be to confine the opt-out approach toworks for which the respective country (for example, the US) is the country oforigin as defined in Art. 5(4) BC,184 because the obligation to provide forcertain minimum rights and the formality requirement of Art. 5(2) BC do notapply in this situation.185 Such a limited adoption of the opt-out model,however, does not seem to be practical. First publication determines the coun-try of origin of a work. Right holders could easily evade the system if theypublished the work in a country other than, for example, the US for the firsttime. Users of P2P networks could not be sure whether the work they wereusing was lawfully available in the network even if it was not in a *.drmformat, because it could still be a foreign work, which does not fall under the


182 See Vienna Convention on the Law of Treaties, Art. 31(3)(b) May 23, 1969 n.55 U.N.T.S.331.

183 In order to address this problem, the authority distributing the money wouldhave to check whether all works that are being used are registered and would have tocontact the respective right holders if this were not the case. This solution obviouslyentails significant administrative costs that diminish the prospects of the whole system.

184 Litman, supra n. 51, at 46 n. 166.185 See Art. 5(1) BC (‘[I]n countries of the Union other than the country of

origin’); Ricketson, supra n. 73, at 5.81; Masouyé, supra n. 87, at 5.6; von Lewinski,supra n. 37, at 5 n. 13. This is the reason why 17 USC § 411(a) limits registration as acondition to instituting an infringement action to ‘United States works.’ See PaulGoldstein (2002), Copyright at § 3.15 (2nd ed.).

system anyway. The opt-out model as such would lose its most importantadvantage, that the levy/tax system presumptively covers all works availablein the network. Finally, it would be even more difficult to persuade the legis-lature to implement a general levy/tax up front if the amendment discriminatesagainst national authors as compared to foreigners.186

If the opt-out model is not in line with international copyright law andadmissible modifications of this concept do not seem reasonable as to theirconsequences, it shows promise to turn one’s attention to the legal and practi-cal aspects of an opt-in model.

Opting in to the Levy/tax System

Features and benefitsUnder the opt-in model, to get paid a share of the levy/tax based on the moni-tored use of the work in P2P file-sharing systems, the right holder has to regis-ter the work with the competent authority. So as long as the work has not beenregistered and technologically tagged, use is unauthorized and thus infringeson the author’s rights.187 This means that exclusivity is the legal default – justas it is today. The levy/tax system would provide an additional business model,available for those right holders who think that this mode of exploitation ismore attractive than individual licensing on the basis of DRM.

Obviously, this solution does not raise doubts as to whether it is in accor-dance with treaty obligations under Berne, TRIPS or the WCT. It does notlimit the enjoyment or exercise of exclusive rights by law. Moreover, theserights come into existence without formalities or other conditions.Accordingly, neither the guarantee of normal exploitation under the three-steptest188 nor the prohibition of formalities is affected. This concept only givesthe copyright owner an incentive to accept lawful non-commercial file sharingby providing a distribution channel where ‘compensation without control’ canbecome a reality.

Contrary to the opt-out model, the questions relating to this approach arenot of a positivistic and legal, but of a practical nature: is it persuasive to


186 See Ricketson, supra n. 73, at 5.81 (explaining that the convention invariablyhas a decisive effect on the content of the domestic laws of its members).

187 Fisher, supra n. 1, at 204, proposes a different solution. If the work is notregistered, it would be deemed to be dedicated to the public domain (‘Would eachcreator be obliged to register his or her creations? No. Unlike cars, songs and filmscould be unlicensed. Creators who wished for whatever reason to dedicate their prod-ucts to the public domain could do so.’).

188 Still, however, the first and third requirements of the three-step test have to beobserved.

implement a levy or tax on devices and services up front if it is still up to theright holder to reserve ‘all’ rights or only ‘some’? And how is this differentfrom a voluntary collective licensing scheme as proposed inter alia by the EFFif the right holder is free to choose exclusivity?189

The opt-in model compared to collective licensingThe difference and, at the same time, the advantage that makes the opt-inmodel more attractive than voluntary collective licensing relates to the fund-ing of the system and how lawful uses are compensated: collective licensingrelies on a voluntary agreement of right holders to form a collecting society,which then offers consumers the opportunity to use works online in exchangefor a regular payment. This system functions successfully only under thecondition that most, if not all, works are covered. Otherwise, consumers haveno incentive to pay a subscription fee if they are not offered a variety ofcontent. If it is not certain that enough users will subscribe, right holders haveno incentive to agree on collective licensing instead of exploiting their worksindividually in different commercial online ventures while trying to stop unau-thorized file sharing in P2P networks. This may be the reason voluntary collec-tive licensing has not been adopted in the digital network environment.190

A levy/tax system provides funds to be distributed among right holderswithout requiring them to establish a collective society and without relying onthe readiness of consumers to pay a subscription fee. Instead, the levy/tax isimposed upfront on services and products whose value is increased by filesharing.191 Thereby, a significant amount of money will be collected. All rightholders who register their works are entitled to a share of this revenue. Theprimary difference between a levy/tax system and collective licensing is that alevy/tax system generates funding as an incentive for choosing ‘sharing’instead of ‘hoarding.’ With registration, the work becomes available for lawfulnon-commercial file sharing. This, in turn, increases the readiness ofconsumers to pay more for Internet access or devices used for file sharing. Inother words, the government would step in to offer an incentive for copyrightowners to accept ‘compensation without control.’ This is necessary because


189 For the EFF proposal, see supra ‘Non-voluntary licenses regarding P2P filesharing’ at p. 154.

190 See Fisher, supra n. 1, at 257–58.191 See Netanel, supra n. 23, at 35–59. The levy/tax would have to be imposed on

all services and products offered in the respective country. Therefore, it would notseverely affect competition in the relevant markets because all manufacturers or suppli-ers of services would have to pay the levy/tax. It has to be admitted, however, thatnewly developed substitutes would have to be covered quickly by the levy/tax.

‘contracting into liability rules’192 obviously does not take place automati-cally. The government, however, cannot force right holders into liability rules,since that would be incompatible with international copyright law. Instead, itestablishes a system for indirect compensation of non-commercial file sharing.Whereas in the short run, not all works will be available for lawful file shar-ing, the fact that at least some will be will probably change consumers’ atti-tude towards the way works on the Internet can be legally accessed. This ‘soft’pressure and change of consumer behaviour is likely to make the levy/taxsystem ever more appealing for copyright owners.

That the levy/tax system may grow due to network effects, however, alsoreveals important drawbacks of the opt-in model. The levy or tax has to beimposed without the guarantee that all works will be lawfully available in P2Pnetworks. Works that promise particular commercial success will not likely beregistered, at least in the beginning. Thus, the ones who have to pay thelevy/tax, consumers and manufacturers of devices and suppliers of servicesused for file sharing, will claim that they are being burdened while the publicbenefit is uncertain. In fact, this value judgment will be at the core of the polit-ical discussion surrounding an opt-in model: is it justified to raise prices fordevices and services at the heart of the information and knowledge society inorder to establish an additional business model for the distribution of copy-righted content online?

As right holders retain their freedom to decide about the use of their work, itwill not be them, but manufacturers of devices and suppliers of services whowill primarily argue against the implementation of this proposal.193 The opt-inmodel shifts the pressure away from copyright owners towards a party thatneither creates nor consumes content. This view, however, neglects the fact thatmanufacturers and suppliers of services profit from unauthorized use of copy-righted works in P2P networks because they commercialize the very servicesand devices necessary for file sharing. Thus, they cannot claim to be uninvolved.

To sum up, there are many good reasons for a bipolar opt-in model, even ifit is uncertain how many works will be lawfully available for non-commercialfile sharing in the end. Most importantly, it is the only model that brings alevy/tax system in the digital network environment into line with internationalcopyright law.


192 See Robert P. Merges (1996), ‘Contracting Into Liability Rules’, 84 Cal. L.Rev. 1293 (explaining why right holders will automatically establish systems likecollective licensing if individual licensing does not work).

193 Fisher, supra n. 1, at 242. This repudiation can also be observed in the courseof the discussion about the future of the limitation and the levy for private copying inGermany; see e.g., Bernd Rohleder (2004), Für eine zukunftsfähige Urhebervergütung,Zeitschrift für Urheber- und Medienrecht (ZUM), p. 1061 (proposing to abolish thelevy for digital private copies).

CONCLUSION

As long as P2P file-sharing technology is not declared illegal194 and is notsubstituted by other technologies, it is here to stay. If copyright owners fail tointegrate this technology into business models to generate revenue from theconsumer’s use of copyrighted works (as in the case of the VCR195), thediscussion about alternatives to exclusive exploitation in cyberspace willbecome ever more important. Proposals for tax or levy systems covering non-commercial file sharing are among the most promising approaches to takeadvantage of this technology for authors and society at large because thismodel secures compensation for authors without hindering P2P networks andthe innovation that this technology brings about: compensation withoutcontrol.196

This chapter has shown, however, that none of the currently discussedmodels is in accordance with obligations contained in international copyrightlaw. The BC, TRIPS and WCT rest upon the notion of legal and technologicalexclusivity enjoyed by the copyright owner. These international instrumentsare opposed to the implementation of statutory, non-voluntary licenses cover-ing non-commercial file sharing. Only if the right holder is free to decidewhether he or she wants a work to be subject to a levy/tax system is exclusiv-ity as the fundamental requirement of international copyright law satisfied. Asa result, exclusive rights and individual licensing have to be the legal default.Therefore, only an opt-in model, in which the right holder has to register thework for the levy/tax system, can be implemented in national law without theneed to either amend international copyright treaties or terminate membership.

Although this approach has some significant drawbacks, particularly withregard to the number of works available for lawful sharing, it neverthelessprovides a business model not available today, to accept file sharing in exchangefor indirect compensation. It is also superior to voluntary collective licensing inthat it generates funding up front and thereby gives copyright owners an incen-tive to opt for ‘sharing.’ In sum, the bipolar opt-in copyright system caters to apermanent coexistence of – speaking in economic terms – property and liabilityrules in cyberspace. Whereas the architecture of proprietary exploitation isconstructed by the copyright owner, the levy/tax system has to be established bythe government. Neither form of exploitation is outlawed.197 Instead, the choice


194 For the limited holding of MGM, 125 S.Ct. 2764 (2005), see supra ‘Copyrightand peer-to-peer networks’ at p. 151.

195 See Lessig, supra n. 32, at 195; Shih Ray Ku, supra n. 40, at 553–57.196 Lessig, supra n. 32, at 201.197 See also Einhorn and Rosenblatt (2005), 52 J. Copyright Society of the USA.

between the two is up to the copyright owner. As a result, this approach enhancesfreedom and triggers competition between the two alternatives for the exploita-tion of works in the digital network environment. All in all, it supports creativepursuits through exclusive rights and innovation in and development of newcommunication technologies.198

What this chapter finally shows is that in thinking about new approaches,existing copyright law must be considered as it is rooted in international lawto a large extent, which in turn is binding upon national and even supranationallegislatures such as the EC. The crucial question to be answered is what thischapter tells us about the harmonization of copyright law in general. In myopinion, it is necessary to carefully examine the drawbacks of internationalharmonization as regards the flexibility of copyright legislation.199 This is truenot only for developing countries,200 but also for highly industrialized nations.Copyright in general is directly linked to and has always reacted to techno-logical changes. Accepting this insight, modern national copyright lawsprovide for expiration dates of certain provisions,201 for specific measures toquickly amend the law,202 or at least for obligatory, regular reports on theeffects of the law.203 Even if one does not call into question the international


239, 271(‘In other words, P2P and DRM technologies should be left to evolve together. . .’).

198 These were the two seemingly opposing policy considerations at the heart ofthe Grokster decision; see MGM, 125 S.Ct. 2764, 2775 (2005) (‘The more artisticprotection is favored, the more technological innovation may be discouraged. . .’); id.at 11, n. 8 (‘The mutual exclusivity of these values should not be overstated,however.’); see also id. at 2 (Breyer, J., concurring) (referring to the need for the lawto ‘strike a balance between a copyright holder’s legitimate demand for effective – notmerely symbolic – protection of the statutory monopoly, and the rights of others freelyto engage in substantially unrelated areas of commerce.’).

199 See generally Annette Kur (2004), ‘A New Framework for IntellectualProperty Rights – Horizontal Issues’, 35 IIC 1, 20; contra Sirinelli, supra n. 12, at26–27 (pleading for additional harmonization); Reinbothe & von Lewinski, supra n.69, Art. 10 WCT no. 11 (recognizing the need to flexibly interpret the three-step test inlight of changing market conditions, focusing, however, solely on strengthening theposition of authors); Goldstein, supra n. 50, at 209–11.

200 See the preamble of TRIPS: ‘Recognizing also the special needs of the least-developed country Members in respect of maximum flexibility in the domestic imple-mentation of laws and regulations in order to enable them to create a sound and viabletechnological base.’

201 See 17 USC § 119(a)(1), (e); Sec. 52a, 137k German CA (proclaiming thatone limitation to copyright – Sec. 52a German CA – expired on 1 January 2007).

202 See 17 USC § 1201(a)(B)-(D) (rulemaking of the US Copyright Officeregarding certain classes of works that are exempted from the legal protection of tech-nological measures).

203 See 17 USC § 1201(g)(5); Art. 12 Copyright Directive, supra n. 100 (bothconcerning the legal protection of technological measures).

harmonization of copyright law in general,204 it is necessary to discusswhether and how we can achieve a balance between the need for adequateminimum protection on a global scale, and the flexibility to react to perhapsfundamental changes in the way works are exploited and used.205 This call forflexibility in international copyright law not only relates to technology-specific rules, like those on technological protection measures, but also to thethree-step test as an open, technology-neutral and central aspect of interna-tional intellectual property law.206 A narrow construction of the three-step testmay prevent the implementation of a concept that addresses new problems(file sharing) in a way that favours most if not all parties involved. If realityproves even the initial point of a given concept wrong, it must be possible tomodify this concept as a whole.207


204 See Kur, supra n. 199, at 20 (naming soft law and recommendations as analternative).

205 This applies even to the proposals discussed herein. These may become obso-lete, just like today’s file sharing, because of easier Internet access which enables infor-mation from commercial databases to be streamed; see Lessig, supra n. 3, at 300–04.

206 Ficsor, supra n. 75, at 5.50; Senftleben, supra n. 56, at 304–11.207 But see Senftleben, supra n. 56, at 304 (arguing that the three-step test lends

sufficient weight to the interests of authors and users alike and that it was wise toembrace the three-step test to circumscribe the ambit of operation of permissible limi-tations in the digital environment).

7. Sharing out online liability: sharingfiles, sharing risks and targeting ISPs

Robert Clark

THE FILE-SHARING PHENOMENON

The use of the Internet to distribute sound recordings now forms a significantproportion of music sales.1 The use of the Internet to facilitate music file trans-fers has spawned new ways of commercialising music, which benefits mostsectors of the music copyright industries. The use of file-sharing technology toenable musicians to distribute music for promotional purposes shows thatoriginal musical compositions and sound recordings can be exchanged over anetwork using MP3 technology without infringing any rights. A startlingdemonstration of this is the success of the Arctic Monkeys. Early soundrecordings and original compositions of the band were available for freedownload, creating a strong fan base and a reputation for ‘integrity’.2 TheGnarls Barkley single Crazy has been available as an illegal download sinceAutumn 2005 but proved so popular that, when it became available for legaldownload in March 2006, the track went to no. 1 in the charts on the basis ofdownloads alone.3 Even the back catalogues of major record companies havebenefited from the availability of single tracks for legal download, thoughthere is a negative impact in the sense that the buying public is less likely to

196

1 The International Federation for the Phonographic Industry (IFPI) estimatesthat in 2005 some 420 million single tracks were downloaded, more than 20 times thefigure for 2003. Estimates for 2006 total 795 million single track downloads. Themarket for music downloads to mobile phones (ring tones, full track downloads, etc.)is estimated to be not far behind music downloads in value. These digital sales broughtin $1.1 billion globally, tripling in value from 2004 during 2006 total sales had nearlydoubled to $2 billion: see IFPI: 06 Digital Music Report p 3 and IFPI: 07 DigitalMusic Report p.4.

2 ‘Arctic Monkeys race to top of the tree’, The Times 30 January 2006; ‘StageGraft’. The Independent 3 February 2006. Songs from Whatever People Say I Am,That’s What I’m Not, their no. 1 album, are not available as ring tones, nor are theircompositions offered for advertising.

3 ‘Record buyers Go Crazy for new Number 1’, The Times 1 April 2006.

buy an entire ‘classic’ album rather than purchase individual tracks.4 Otherdevelopments in the British music industry indicate a shift away from tradi-tional models of music distribution. Radiohead initially released the album InRainbows via digital download only, with fans being able to decide how muchto pay for the album. While surveys indicate that fans may, on average, havepaid as little as £4 (with one third of fans paying nothing at all),5 it is gener-ally thought that by stripping away the margins normally afforded to therecord companies and retailers, Radiohead still netted increased profits as wellas considerable kudos amongst Internet music users. Nor is this kind ofmarketing model being used exclusively by major and established acts whohave, like Radiohead, been able to break free from record labels. Indie bandThe Crimea gave away its second album, Secrets of the Witching Hour in2007, the band being only one of many acts which have realized that therevenue opportunities being afforded to touring, live performances andmerchandising outstrip record sales by some distance.6 Any perusal of socialnetworking sites such as Facebook will show up the importance of this kind ofmarketing and distribution mechanism, often encapsulated in the fact that fansare able to access music legally and for free. Indeed, bands likes Koopa havebroken into the singles charts without a record deal of any kind, relying heav-ily on social networking sites to publicise and distribute their works, often byactively encouraging fans to share music files with friends as part of theirsocial experience that Facebook, etc. seek to foster. Of course, where a soundrecording copyright is involved, MySpace and Facebook etc. will no doubtseek and obtain licenses, but this may not always be necessary

File sharing is not per se illegal; it also benefits creators and right holdersby meeting consumer demand. Some right holders and other entities in theentertainment products distribution chain may not like the way in which digi-tal distribution and greater consumer choice have challenged traditionalmarkets – for example, the impact of direct download and on-demand serviceson the retail industry – but the process is irreversible.

This chapter seeks to explore the file-sharing phenomenon in the context ofinternational copyright norms and the response that the activities of file shar-ers have provoked from the music industry and national courts. Its focus,given that the legal response is rooted in individual jurisdictions, is the law ofthe UK and Ireland, although case law from other jurisdictions is examined.

Sharing out online liability 197

4 ‘Downloads make hit singles again’. Available at www.washingtonpost.com/wp-dgn/article/2006/02/07

5 ‘How much is Radiohead’s online album worth? Nothing at all, say a third offans’. The Times 11 October 2007.

6 ‘Album giveaway could ignite music revolution’, The Guardian 30 April2007.

What emerges is a much more complex picture of the liability issues that liti-gation has generated, with a greater number of potential actors being caughtup in potential liability scenarios than was previously thought. While manycommentators have rightly questioned whether right holders have sufficientlyappreciated the opportunities afforded by new methods of music transfer –often blaming market failure for encouraging illegal copying by users – thereare signs that the courts are coming to grips with file sharing. However, signsof structural change are appearing in the way in which issues of online liabil-ity and immunity are addressed, with consequences for the future operation ofISPs. Indeed, some decisions explore the possibility of allocating both the riskand liability in a much more horizontal way than the early stages of the debateon file sharing could possibly have anticipated, drawing attention in numerousjurisdictions to the possibility that acts of infringement of copyright can beimpeded, if not negated entirely, by technical measures at a variety of levels.

A KEY COPYRIGHT CONCEPT

Apart from protection under traditional copyright laws, in national legislation,Art. 8 of the 1996 WIPO Copyright Treaty provided additional protection tothe authors of works, this being the following:

the exclusive right of authorising any communication to the public of their worksby wire or wireless means including the making available to the public of theirworks in such a way that members of the public may access these works from aplace and at a time individually chosen by them.

This provision, replicated in the WIPO Performances and Phonograms Treaty,Arts. 10 and 14 for performers7 and phonogram producers8 respectively, isreinforced by the European Union Information Society Directive.9 And vonLewinski, commenting on the 1996 Treaties shortly after they were agreed,opined that, as to their application to new technologies, ‘the WIPO treaties areprobably even more advanced and adapted to the current technologies thanany national law’.10


7 See Art. 2(a) for the definition of performers.8 See Arts. 2(b) and 2(d) for definitions of ‘phonogram’ and ‘phonogram

producer’ respectively.9 Directive 2001/29, Art. 3. Earlier EU legislation in the form of the Rental and

Lending Right Directive, Directive 92/100, contained in Art. 9 a distribution rightlimited to the physical distribution of a work or copies of the work.

10 (1997) 28 IIC 203, 207–208.

These Articles provide a clear basis for protecting authors’ works and soundrecordings from piracy and unauthorised online transfer. Before the adoptionof the WIPO Treaty, online dissemination (to use a legally neutral word) ofcopyright works created several conceptual difficulties for judges as defini-tions and terms of art that were apt earlier in the previous century do not makesense in a digital environment. The reproduction of a work, the publication ofa work, the distribution of a work, and the broadcasting of a work are the fourcornerstones of liability, but their late 20th century relevance was problemati-cal. When a work exists solely in an electronic format, some jurisdictions havefound it difficult to hold that the replication of the work in that form is aninfringing act.11 While these cases reflect in part the failure of national legis-latures to keep statutes in step with international treaties, delays in the imple-mentation of treaty obligations can and do occur. Moreover, on the difficultpolitical issue of defining reproduction, the international community failed toproduce a definition (the 1996 Geneva treaties contain something less than asatisfactory outcome on this point).12 On the issue of ISP liability through thecommunication of a work to the public, however, Art. 8 of the WIPOCopyright Treaty is fleshed out by an Agreed Statement which provides thatthe provision of physical facilities does not amount to a communication withinthe treaty or the Berne Conventions. The Hague Court of Appeal referred tothis in Church of Spiritual Technology v Dataweb BV in dismissing copyrightinfringement actions against website hosts, the court holding that ‘serviceproviders only provide the technical facilities for others to expose information.Therefore it does not seem right to consider them as being equivalent topublishers’.13 A French court reached a similar conclusion,14 but it is theSupreme Court of Canada that has most authoritatively analysed the legalcharacteristics of online distribution of copyright works. This decision isimportant, given that Canada at the relevant time had not ratified the 1996Treaties.


11 See e.g. Ireland in cases like News Datacom Ltd v Lyons [1994] 1 ILRM 450(smartcards) and Gormley v EMI [1999] 1 ICRM 154 (tape recorded speech not awork).

12 The failure of the 1996 WIPO Diplomatic Conference to flesh out the repro-duction right was in part ameliorated by the Agreed Statement concerning Art. 1(4).

13 [2004] ECDR 258 [269].14 Perathoner v S. Joseph Société Free [2003] ECDR 76. See generally Gervais

(2001) 34 Vand J Transnat’l L 1363.

SOCAN: THE COPYRIGHT BOARD AND APPEAL COURTDECISIONS

Canadian Association of Internet Providers v Society of Composers, Authorsand Music Publishers of Canada (SOCAN)15 resulted from SOCAN’s appli-cation to the Canadian Copyright Board for approval of a tariff scheme thatpermitted access to the SOCAN repertoire via an ISD telecommunicationsservice at a time and place selected by the subscriber/user. Initially, SOCANargued that virtually everyone involved in the transmission chain would berequired to pay royalties to SOCAN. SOCAN later resiled from this positionvis-à-vis infrastructure service providers (for example, Bell), the ‘backboneservice providers’, but the claim was prosecuted against ISPs. SOCAN alsoclaimed entitlement to collect the tariff against all ISPs located in Canada, irre-spective of where the transmission originated.

The legislative background to the SOCAN proceedings can be found in theCanadian Federal statute, The Copyright Act,16 a traditional copyright statutebased on the UK’s Copyright Acts 1911 (the Imperial Statute) and 1956.However, although Canada had not then adopted the 1996 WIPO Treaties onthe ‘making available’ right,17 SOCAN argued that the ISPs were communi-cating works to the public – individual end-users – or authorising contentproviders to infringe copyright by ‘hosting’ unauthorised files on servers. Inaddition, SOCAN argued that certain acts by the ISPs infringed the reproduc-tion right: when an ISP gives an end-user access to a website end-user via atelecommunications network, the end-user’s request creates a stored copy,which is made as a matter of technical necessity. While these copies arenormally deleted within hours, the effect of another user requesting access tothe same work may be that the browser of the ISP directs that second user tothe cached copy rather than the original website on the remote server, thisbeing cheaper and faster. The effect of caching on liability was, thus, an impor-tant element in the SOCAN proceedings.

The Canadian Parliament provided in s. 2.4(1)(b) of the Copyright Act that,in relation to the act of communication of a work to the public by telecommu-nication,

a person whose only act in respect of the communication of a work or other subject-matter to the public consists of providing the means of telecommunication neces-


15 Copyright Board of Canada (1999) 1 CPR (4th) 417: Federal Court of Appeal,(2002) 215 DLR (4th) 118.

16 RSC 1985, c C-42, amended by 1988, c 65.17 The treaties had been signed but not ratified.

sary for another person to so communicate the work or other subject matter does notcommunicate that work or other subject-matter to the public.18

The Copyright Board considered that an Internet communication occurs whenthe work is transmitted from the host server to the end-user’s computer andthat the end-user’s access to the file is irrelevant. As to whether the ISP partic-ipates in the transmission, the Board held that s. 2.4(1)(b) directs that an ISPdoes not communicate the work if its only act is to provide the means ofcommunication necessary for another person to communicate. The Boardhowever extended the immunity to ISP activities vis-à-vis the cached fileswhere the cache is created solely for improving system performance. TheBoard also held that proof that the ISP knew that its facilities might be used byothers to infringe copyright did not constitute ‘authorising’ infringement.SOCAN sought judicial review of this decision. The Federal Court of Appeal,by a 2:1 majority, ruled that s. 2.4(1)(b) did not provide immunity for the ISPin respect of caches of music files; such caches are not a practical necessity. S.2.4(1)(b) directs that the communication must be necessary, while merelyeffecting improvements in terms of speed and cost of access are not within thesection.

SOCAN in the Supreme Court of Canada

The Supreme Court of Canada,19 by an 8:1 majority (Le Bel J dissenting inpart), dismissed the appeal on the jurisdictional issue of when an Internetcommunication takes place in Canada, but upheld the ISPs’ arguments on thescope of s. 2.4(1)(b). The Court’s analysis clarifies many issues addressed laterin the file-sharing cases. The judgment of the majority, delivered by Binnie J,reflects an awareness of the approach adopted in jurisdictions that have specif-ically legislated for ISP immunity and liability, the provisions of s. 2.4(1)(b)being interpreted in accord with the more ‘tailored’ foreign legislative texts.

Binnie J did not view s. 2.4(1)(b) as providing an ISP with immunity.Rather, the section says that:

such intermediaries are deemed, for purposes of the Copyright Act, not to commu-nicate the work to the public at all. Whether or not intermediaries are parties to thecommunication for legal purposes other than copyright is an issue that will have tobe decided when it arises.20


18 RSC 1985, c C-42.19 (2004) 240 DLR (4th) 193.20 18 ibid 224.

Binnie J viewed s. 2.4(1)(b) as requiring a ‘balanced reading’, suggesting thatthis provision’s roots lay in the innocent dissemination defences in defama-tion.21 After focusing on the word ‘necessary’ in the section and the legislativehistory, he concluded that an act is necessary ‘if the means are reasonablyuseful and proper to achieve the benefits of enhanced economy and effi-ciency’. Agreeing with the Board that ‘means’ are not to be confined to routersand other hardware but could extend to software connection equipment, host-ing and other facilities and services, Binnie J observed:

So long as an Internet intermediary does not itself engage in acts that relate to thecontent of the communication, i.e. whose participation is content neutral, butconfines itself to providing a ‘conduit’ for information communicated by ethers,then it will fall within section 2.4(1)(b).22

He cited, with apparent approval, the Board’s conclusions that, with respect tomost transmissions, ‘only the person who posts a musical work communicatesit’ and that ‘the content provider effects the communication’.

Binnie J then suggested that ‘mere conduit’ status will be scrutinized by thecourts in appropriate cases, citing both Art. 8 of the WIPO Copyright Treatyand Recital 42 of the EC Electronic Commerce Directive.23 Noting that lackof knowledge is not a defence to copyright liability, the opposite could well bea basis for denying protection under s. 2.4(1)(b): the presence of such knowl-edge [that illegal files are held] would be a factor in the evaluation of theconduit status of an Internet Service Provider. 24

Thus, the Supreme Court of Canada both provided an analysis of who is aninfringer in an online transmission and proposed that any immunity, whetherbased on a specific statute or as a matter of general law, may need a ‘balanced’analysis rather than a blanket application in favour of either right owner or ISP.

SOCAN bridges earlier case law, in which conduit status generally affordedan immunity,25 and the more pragmatic position reached in the file-sharingcases. Binnie J clearly considered that the balance of interests of users andright holders could best be served by following the knowledge of infringingmaterials and notice and take down procedure found in the ElectronicCommerce Directive.26 Viewed in this light, the file-sharing cases are more


21 (2004) 240 DLR (4th) 193 [224].22 (2004) 240 DLR (4th) 193 [226].23 Directive 2000/31.24 (2004) 240 DLR (4th) 193 [232].25 See in particular the Supreme Court of Canada, Electric Despatch Co. of

Toronto v Bell Telephone (1891) 20 SCR 83 at 91, cited at (2004) 240 DLR (4th) 193[227].

26 (2004) 240 DLR (4th) 193 [232].

straightforward because those who provide website links to software, or tomusic files, often do so knowing that there is a high probability that thecontent is illegal; motivation may often be attributed to personal gain viaadvertising revenues that require users to access illegal files in order to maxi-mize revenue.

RELEVANT INFRINGEMENT PROVISIONS IN UK ANDIRISH LAW

Both UK and Irish copyright law follow the same pattern in making provisionfor acts of primary and secondary infringement. The copying of a work, themaking available to the public of a work, and the adaptation of a work areprimary infringing acts.27 Acts of secondary infringement involve dealingswith infringing copies through acts of importation, sale, or other distribution.28

In the context of electronic transmission, common law courts have been askedto consider whether the use of information, or a work, falls within a particularword or phrase. For example, in Reform Party of Canada,29 it was held thatthe posting of a work on a website could be ‘publishing’ or ‘broadcasting’,although a later decision of the Ontario Court of Appeal cast some doubt onthis vis-à-vis the issue of broadcasting: Bahleida v Santa.30 In CCH CanadianLtd v Law Society of Upper Canada31 the Supreme Court of Canada ruled thatthe facsimile transmission of the single copy of a work is not a communica-tion to the public of that work, while the Supreme Court of New South Walesheld that the sending by an employee of copies of confidential documentsfrom his workstation to his home computer was not an act of communicationto the public – but the transfer of the file may be an act of ‘reproduction’ untilsuch time as the file is opened or deleted: Woolworths Ltd v Olson.32

While the ‘making available’ right in Art. 8 of the 1996 WCT goes someway towards clarifying that authors enjoy such rights, this provision does notresolve questions of when, how, and by whom the making available right isengaged. Several European decisions demonstrate that the courts struggle to


27 Copyright Designs and Patents Act 1988, ss. 22–27, as amended; (UK)Copyright and Related Rights Act 2000, ss. 37–43 (IRL).

28 Copyright, Designs, and Patents Act 1988, ss. 22–27 (UK); Copyright andRelated Rights Act 2000, ss. 44–48 (IRL).

29 Reform Party of Canada v Western Union Insurance Co. (1998) 3 CPR(4th)289.

30 (2003) 233 (4th) 382.31 (2004) 236 DLR (4th) 395; see Gervais (2004) 18 IPJ 131.32 (2004) 63 IPR 258 (New South Wales).

fit file sharing into pre-Internet terminology such as acts of ‘performance’ and‘distribution’33 of a work. Even where the ‘making available’ right is trans-posed into national law, the trend in most common law jurisdictions is to usethe concept of authorization of infringement, a concept that exists indepen-dently34 of primary infringement in the legislation of jurisdictions such asIreland, Australia, Canada, and the UK.35 The attraction of using the ‘authori-sation’ concept is that the defendant may not actually participate in the infring-ing act but, where that person facilitates infringement by others, or sanctionsor approves of such conduct, liability may result. In a recent case, a party whoinstructed the employees of another to ‘data mine’ the plaintiff ’s database hadcommitted an act of authorisation for which he could be personally liable.36

The utility of the ‘authorisation’ concept is evidenced by the fact that, in theUS file-sharing cases, the courts have had to resort to basic common lawconcepts such as vicarious infringement and contributory infringement, aswell as devising a notion of inducement, in order to visit liability on the defen-dants.37 In many European jurisdictions, the courts also had to rely on generalprinciples of civil liability, such as whether the facilitation of file sharing canprovide the basis for liability as an accessory.38 The general result appears tobe that liability will be imposed if the primary infringer, in this case, the down-loader, does not have a defence such as private use (the conclusion reached inBruvik, which also discussed the possibility of contributory infringement).Thus, the gap between civil law solutions to this new problem and the line ofauthority in the US may not be significant, at least in terms of finding commonapproaches to the issues.

CIVIL LIABILITY FOR ONLINE TRANSMISSIONSGENERALLY

The general issue of civil liability for online transmissions containing illegal


33 See e.g. Bruvik v EMI Norsk SA [2005] ECDR 331; see also Krog (2006) 22CLSR 73.

34 Gummow J in WEA International Inc. v Hanimex Corporation (1987) 17 FCR274.

35 Authorization of infringement first appeared in the Copyright Act 1911, s.1(2).

36 Nominet UK v Diverse Internet (2004) 63 IPR 543 (Western Australia).37 US Senate Bill s. 2560 posited a new basis for liability. For a discussion of this

Bill in the context of Grokster see Band (2005) Computer and Internet Lawyer 22: 138 KODA v Lauritzen and Egeberg [2002] ECDR 25 (Denmark); Bruvik v EMI

Norsk [2005] ECDR 332 (Norway).

material, before the Electronic Commerce Directive,39 generally arose fromdefamation actions. Early US case law on website postings employed an anal-ogy with established principles. Was the ISP a publisher or merely the equiv-alent of the news vendor or delivery boy? The conclusion was that an ISP thattransmitted content of which it had no knowledge, or which it did not createor control (for example, by editing content), could not lead to liability. Clearly,the content provider would be liable but ISP immunity was initially affordedvia case law in the USA40 and later put onto a firmer statutory footing.41

In the UK, defamation was addressed by legislation in the Defamation Act1996, s. 1(1) of which provided a network provider or a service provider witha defence in defamation proceedings if it could show that it was not the author,editor, or publisher of the statement, had taken reasonable care in relation tothe publication and did not know, and had no reason to believe that it hadcaused or contributed to a defamatory statement. Morland J considered thatprovision in Godfrey v Demon Internet,42 where an ISP sought to rely on it inproceedings concerning defamatory material in an email posted on a servermaintained by the defendant. The defendant did not respond to the claimant’srequests to take down the statement, which was deleted automatically 10 daysafter being posted. Morland J held that, under English common law, the ISPwas liable as a publisher and that, while s. 1 of the 1996 Act afforded adefence, the defendant did not come within it because it could not show that ithad taken reasonable care in relation to the publication and could not show thatit did not know, and had no reason to believe, that what it did caused orcontributed to the defamatory publication.43 More recently, the English HighCourt, in Bunt v Tilley44 distinguished Godfrey on the basis that the three ISPdefendants merely afforded access to the Internet with the defamatory contentcomplained of being hosted by entities such as Google via a Usenet service.Eady J took the view that common law liability would require a plaintiff toestablish ‘knowing involvement in the process of the publication of the rele-vant words’ and whether the defendants had been notified of the wordscomplained of in such a way as to render them subsequently responsible forthe publication. On the facts, none of the three ISP defendants triggered thesetests, unlike the defendant in Godfrey. It is particularly noteworthy that, in


39 Directive 2000/31.40 The classic cases are Stratton Oakmont v Prodigy Services Co. (1995) 23

Media L.Rep. 1794 and Cubby v Compuserve 776 F Supp 135 (1991).41 Communications Decency Act 1996 (47 USC s 230 et seq.). See generally

Voelzke (2003), Computer and Internet Lawyer 22: 4.42 [2001] QB 201.43 As required by s. 1(5).44 [2006] EWHC 407 QB.

Godfrey, Morland J considered that both US case law and the US statutoryimmunity were much broader than that afforded to an ISP under English lawbut the Defamation Act 1996 solution, as well as US legislative initiatives,clearly influenced the shaping of the European ‘solution’ to online civil liabil-ity in the form of the Directive.

THE ELECTRONIC COMMERCE DIRECTIVE

The European Commission, influenced by other jurisdictions (especially theUS) towards affording either limited or general immunities to networkproviders and ISPs, promoted what eventually became the ElectronicCommerce Directive.45 The relevant UK regulations46 apply, inter alia, to theCopyright, Designs, and Patents Act 1988. In essence, these regulations, andtheir Irish counterpart,47 provide the following:

• there is no liability where an ISP does not initiate the transmission,select the recipient or select or modify the information (‘mere conduit’defence);

• there is no liability for the automatic, intermediate and temporary stor-age of information for the sole purpose of more efficient onward trans-mission (caching defence);

• there is no liability for storing information at the request of another if anISP does not have actual knowledge of the activity and, where damagesare sought, is not aware of facts or circumstances from which the unlaw-ful activity is apparent, or when informed or aware of the illegal contentacts expeditiously to remove or disable access to the information (thehosting defence).

While there are some textual differences between the Irish and UK regulationsin terms of the mode of expression, the Directive clearly was intended toprovide some form of protection against claims that an ISP may be liable forinfringement of copyright by, inter alia, storing, transmitting, or caching ille-gal music files or audio-visual works. Insofar as there is no case law on ISPliability per se, the Directive has been successful, but the obiter statements ofEady J in Bunt v Tilley are extremely important in the light of subsequent


45 2000/31.46 The Electronic Commerce (EC Directive) Regulations 2002 (2013/2002) (as

amended by 1178/3005) Articles 17–19.47 European Communities (Directive 2000/31/EC) Regulations 2003 (SI

2003/68).

developments such as SCRL Société Belge des Auteurs Compositeurs etEditeurs v SA Scarlet48 (hereafter Scarlet). In dealing with the complainant’sobservations that the Directive denied him justice by extending too broad aform of immunity, Eady J responded:

the regulations would not preclude the grant of an injunction in a proper case. It isconcerned to restrict financial and penal sanctions. … looking at the matter morebroadly, it is clear to me that the injunctive relief sought by the claimant is whollydisproportionate to any conceivable legitimate advantage. He seems to be applyingfor an order preventing any supply of services to the relevant defendant. That wouldbe draconian and pointless, since the individual defendants would be able to obtainsuch services with great ease elsewhere.

PRE-DIRECTIVE EUROPEAN CASE LAW

Before the Directive’s Article 14 hosting ‘shelter’, ISPs faced significantexposure in Europe. In Hi Bit Software GmbH v AOL Bertelsmann OnlineGmbH,49 the Landgericht Munich 1 observed that, while knowledge of illegalcontent being downloaded was within the capacity of the ISP (by use of texteditors to open files), no such capacity or knowledge could per se be imputedto the uploading of files. On appeal,50 the Oberlandesgericht Munich rejectedthis distinction, holding that AOL, ‘opening a forum to facilitate itssubscribers in exchanging musical works and sound recordings’,

was issuing nothing short of an invitation to infringement of copyright and ancillaryrights on a grand scale … the defendant’s conduct thus amounted in general andwith regard to the titles which are the subject matter of the dispute to gross negli-gence, if not even eventual intent.51

However, liability will not result if the ISP merely hosts content without, as inHi Bit, having any knowledge of illegal copyright material, and the ISP actsexpeditiously to disable access when furnished with adequate details of unlaw-ful material. French case law52 suggests a distinction between defendants whohost content as distinct from providing a link to content hosted elsewhere. Thecommon law jurisdictions reflect this distinction between positive inducementof others to file share (as in HiBit) and a general awareness that the defendant’s


48 [2007] ECDR 320.49 [2001] ECDR 375; see also Koubareli v Volotas and Forthnet SA [2003]

ECDR 19.50 [2001] ECDR 375.51 [2001] ECDR 375, 393–394, 14 December 2000.52 Perathoner v S. Joseph Société Free [2003] ECDR 76 (Paris).

facilities may be used by others to share files. While there has been no reportedcase law on file sharing in the UK, other common law jurisdictions have beenhotbeds of file-sharing litigation. The US decisions in Grokster53 andNapster54 have the most high profile in the file-sharing arena, but recentAustralian case law may be of greater clarity and relevance than Grokster, forexample, at least to common law jurisdictions

THE AUSTRALIAN CASES AND EUROPEANCOUNTERPARTS

The Federal Court of Australia, in Universal Music Australia Pty Ltd vCooper55 was first to consider issues of liability, where an ISP could not beshown to have directly loaded infringing files on to his server, but it could beshown that users had access to facilities, provided at the behest of the defen-dant, enabling users to exchange files containing infringing works. Cooperoperated a website under the domain name mp3s4free.net. Cooper made acommercial arrangement with an ISP that gave him free hosting facilities inexchange for revenue-sharing in respect of ‘hits’ made to mp3s4free.net andadvertising royalties paid to Cooper. The evidence indicated that usersaccessed music files by logging on to the website, accessing and downloadingmusic by clicking hyperlinks that transferred the user to ‘free’ songs on thebasis of criteria such as ‘Billboard 50’, ‘Popular Artist’, or the alphabeticalarrangement of an artist’s name or song title. The files in question were notheld on Cooper’s website. In the view of Tamberlin J, Cooper could not beheld to have communicated the work to mp3s4free.net’s users. Tamberlin Jwas not satisfied that:

the Cooper website has ‘made available’ the music sound recordings within themeaning of that expression. It is the remote websites which make available thesound recordings and from which the digital music files are downloaded as a resultof a request transmitted to the remote website.56

Similar reasoning has also been applied in Europe. In KODA v Lauritzen and


53 125 S Ct 2764. The subsequent reaction to Grokster was immense; e.g.Blakeney [2006] CTCR 55; Ganley [2006] EIPR 15; Hogberg (2006) 106 Col LR 909;Radcliffe 22 CLSR 137. 50.

54 A&M Records, Inc. v Napster 239 F 3d 1004 and 284 F 3d 1091 (2002).55 (2005) 65 IPR 409, exhaustively reviewed by Hyland at (2005) 10(5) Comms.

Law 157.56 (2005) 65 IPR 409 [424].

Egeberg,57 the Vestre Landset, Denmark, found that when two children whomaintained their own websites created links directly to infringing music files,they were liable as principals and accessories to infringement. The reasoningon principal liability is difficult to reconcile with the Swedish Supreme Courtdecision in Public Prosecutor v Olssen58 where it was held that making a linkis not an act of distribution. The controversial Dutch decision in VerenigingBuma, Stichting Stemra v Kazaa59 may have broader precedent value, theCourt of Appeals holding that Kazaa was not liable for the actions of othersbecause the facilitation of infringement by third parties was not of itself an actof publication, nor was such conduct an act of reproduction in its own right.

The best-known ‘first generation’ file-sharing decision is that of the NinthCircuit Court of Appeals in A&M Records, Inc. v Napster,60 the leading deci-sion arising out of ‘the notorious file-sharing service Napster’.61 Napsterpermitted members of the Napster Community of users, following sign-up andthe downloading of free software from site, to search and download musicfrom the hard drives and servers of other Napster users. Napster provided bothuser support and indexing facilities via its central registry. While it was not indispute that Napster was a primary infringer, Napster sought to counteract alle-gations of contributory and vicarious infringements by arguing that, since itsusers did not infringe copyright, no case for its secondary liability could bemade out. Fair use defences in respect of the sampling of music files wererejected, as was a defence of time shifting.

The Court of Appeals for the Ninth Circuit has handed down a fairly pro-user decision on linking, Kelly v Arriba Soft Corporation.62 Although fair usedid not feature in the Ninth Circuit’s later decision in Grokster,63 Napster isrooted in the factual link between the activities of Napster in directly stimulat-ing infringement by its users and the common law concepts of contributory andvicarious infringement as the basis of civil liability. So, while the US approachto issues of secondary liability is constrained to use common law concepts tovisit liability on file-share facilitators, other jurisdictions have specific statutoryprovisions than can be used in such context. The Copyright Act 1911 being thebasis of Irish, Canadian, Australian, and New Zealand statutory traditions, theconcept of infringement by authorising others to commit acts of primaryinfringement is an extremely important means of redress.


57 [2002] ECDR 25.58 [2001] EDCR 303.59 [2004] EDCR 183.60 239 F 3d 1004 (2001); 284 F 3d 1091 (2002).61 Per Souter J in MGM v Grokster 125 S Ct 2764 (2005).62 336 F 3d 811 (2003).63 380 F 3d 1154 (2004).

In the classical sense, authorisation of infringement is made out by show-ing that the primary infringer has the benefit of another person’s ‘sanction,approval or countenance’. Case law makes it clear that mere knowledge thatanother person may infringe copyright is not enough to constitute acts ofauthorisation and that the person having authorised infringement may only doso where he or she has the necessary power to control the infringing act. Thus,hiring out sound recordings in the knowledge that hirers may make copies inthe privacy of the home will not make the hirer an authoriser,64 nor does thesale of a tape recorder, even on the foot of advertising copy that refers to copy-ing, make the seller of that equipment an authoriser (although this decision isborderline65). Nevertheless, Universal Music Australian Pty Ltd v Cooper66

supports the view that the provision of file-sharing facilities may be acts ofauthorisation if the putative authoriser is shown to have sufficient control overboth the user accessing the website and any remote operator placing hyper-links on it. Cooper did not monitor users to see if the files being downloadedwere legal, nor did he scrutinise those linking to his site for illegal content. Assuch, Cooper was held to have infringed copyright by authorising both down-loading by users and of the making available of illegal files by operators ofremote websites.

At the heart of Cooper is a notion of authorisation that is rooted in the fail-ure to exercise control over others. The Australian cases in particular stress thepossibility that authorisation may occur by omission: where a defendant has‘abstained from action which under the circumstances then existing it wouldhave been reasonable to take, or . . . exhibited a degree of indifference . . . ’,67

permission may be inferred. Canadian case law has specifically rejected thisreasoning68 and it has yet to find favour in England because it is incompatiblewith Amstrad. However, as a recent New Zealand Court of Appeal decisionpoints out, Amstrad was a case on its particular facts, where the defendant hadno control over the domestic use of a technology that could be put to substan-tial non-infringing uses as well as infringing ones.69 In the file-sharing cases,


64 CBS Inc. v Ames Records and Tapes [1982] Ch 91.65 CBS Songs v Amstrad Consumer Electronics [1988] AC 1013. Sale of smart

cards that may be used to illegally decrypt a broadcast signal may also infringe accord-ing to Canadian case law (which is generally more pro-user that Australian case law):see Columbia Pictures Industries Inc. v Frankl (2004) 36 CPR (4th) 342, ColumbiaPictures Industries Inc. v Gaudreault [2006] FCA 29.

66 (2005) 65 IPR 409. For a recent Dutch counterpart, see BREIN v TechnoDesign ‘Internet Programming’ BV [2006] ECDR 21 (Court of Appeal, Amsterdam).

67 Knox CJ in Adelaide Corporation v APRA (1920) 40 CLR 481 at 488,approved in Moorhouse (1975) 133 CLR 1 and Cooper (2005) IPR 409.

68 Moorhouse v University of New South Wales (1975) 133 CLR 1.69 Heinz Wattie’s Ltd v Spantech Property (2005) 67 IPR 666.

the courts have held that the defendant had the capacity both to monitor useand restrict (albeit imperfectly) access to illegal files. Amstrad does not repre-sent a barrier to the use of the authorisation of infringement concept by anEnglish court and the obiter statements of Binnie J in SOCAN70 do not suggestan aversion to finding that an ISP has authorised infringement in specificcircumstances.

GROKSTER AND AUSTRALIAN LAW

In Grokster, the Supreme Court borrowed heavily from patent law to formu-late an inducement test that could form the basis of secondary liability (whileretaining the earlier Sony decision on dual use71). The critical issues that ledto expanding liability far beyond Napster were the defendants’ desire to bene-fit from the termination of Napster’s unlawful service, the failure to use filter-ing technologies to frustrate infringing use by Grokster users, and a revenuemodel that incentivised high volume use, much of which was directed at repli-cating copyright material without permission. Although the Australian FederalCourt in Universal Music Australia Pty Ltd v Sharman License Holdings Ltd72

found Grokster ‘to be of little assistance’,73 given legal and factual differencesbetween the US and Australian litigation, the result and conclusions reachedare virtually identical. In both, the court concluded that provision of facilitiesper se will not trigger liability, but knowledge of third-party use of a servicethat in terms of cumulative use may threaten a copyright industry, may requirethe service provider to adopt measures to restrict infringing use. This willcertainly be so where the service provider advertises or publicises the serviceas having this illegal capacity, and the success of its business model adoptedis predicated on levels of infringing use.

For a service provider seeking to avoid liability for copyright infringement,the critical feature of Kazaa technology was the apparent absence of a centralregister of infringing copies, and that no infringing copies were held by Kazaa.The technological problem of facilitating a Kazaa ‘node’ to access a musicfile, without a central register, was solved by building into Kazaa the capacityto use the networking capacity of high capacity computers to which the indi-vidual ‘node’ was already linked (such as those of large corporations anduniversities). Such a facility, known as a ‘supernode’, provided the physicaland geographical context within which groups of Kazaa users could both


70 (2004) 240 DLR (4th) 195, especially at 232–235.71 Sony Corp. v Universal City Studios Inc 464 US 417 (1984).72 (2005) 65 IPR 289, reviewed by Hyland at [2006] CTLR 98.73 (2005) 65 IPR 289 at 301.

develop and interchange files. Kazaa technology also permitted a degree ofinformation transfer between ‘supernodes’ in order to collate information onthe number of Kazaa users and downloads.74

Wilcox J did not find that Sharman operated a central register (though hethought that this was a possibility); nor could the infringing acts of users bevisited upon the defendants simply because the latter supplied the technology.There was however ample material on which liability as an authoriser couldbe made out. Wilcox J identified positive acts of approval75 in the form ofwebsite promotions exhortations to users to use the facility and share shares,as well as promotional material that criticised right holders and their use ofcopyrights. When these statements were made, Sharman knew that most filesaccessed via Kazaa were illegal. As to whether Sharman infringed by tacit actsof authorisation, Wilcox J followed Cooper, holding that Sharman’s financialinterests were best served by not regulating user access as advertisingrevenues depended on high volume, use, and access restrictions would earnlower revenues. Like Cooper, some technical restrictions and other measuressuch as keyword filtering and allowing access to gold files predominantlywould have reduced illegal file sharing, but Sharman took no such steps.While Sharman was given two months to put a number of technical and non-technical measures in place, the deadline came and went. Kazaa.com soughtto restrict Australian users from downloading the software, the website carry-ing the banner notice: ‘If you are in Australia, you must not download or usethe Kazaa Media Desktop’. The Full Court of the Federal Court of Australiadismissed Sharman’s appeal and proceedings for contempt of court have sincecommenced. Sharman Holdings may also face judicial proceedings in otherjurisdictions.76 Grokster itself has agreed to pay the entertainment industryUS$50 million and close down its operations.77 But while the record industry


74 Supernodes identified by the plaintiffs included a number of universities; forsecondary infringement by universities see Harris (2004) 31 Rutgers Computer andTech. L.J. 187.

75 This conclusion is not dissimilar to that reached in the German case of Hi BitSoftware GmbH v AOL Bertelsmann Online GmbH [2001] ECDR 375.

76 2005/2006 Copyright World No. 156, End of three-year battle. The websitewww.grokster.com currently carries a message stating ‘There are legal services for down-loading music and movies. This is not one of them. Your IP address is [number] ANDHAS BEEN LOGGED. Don’t think you can’t get caught. You are not anonymous’.

77 In California in 2003, proceedings against Sharman Networks brought byRIAA and MPAA persuaded the District Court to exercise jurisdiction. But, applyingSony, the court said that StreamCast was no different from a VCR or a photocopier;judgment of 25 April 2003 by California District Judge Stephen Wilson. In July 2006,Sharman Networks announced a $100 million settlement of worldwide litigationbrought by the music and motion picture industries, opening the door to legitimate useof Kazaa technology to distribute works on a P2P basis.

continues to pursue software providers, persons providing links, and so on,following the somewhat belated success of the US Grokster case, and theSharman decision in late 2005, the music industry has been fighting down-loading on other fronts – in the offices, bedrooms, and studies of Internet usersthroughout the world.

FILE SHARERS AND PERSONAL LIABILITY

Those engaged in unauthorised file sharing are personally liable as copyrightinfringers in the absence of any defence such as private copying. The user whomakes a copy of a music file available to others even if that file is legal78 islikely to have authorised others to make an illegal copy or be responsible as asecondary infringer. A file sharer using Kazaa, for example, may also infringethe reproduction right by way of the copy made and held in ‘my shared folder’file, as well as the making available right. But this author is unaware of anyreported decisions in which these points have been finally determined.

The international music industry, particularly its representative organiza-tions, has actively pursued file sharers in many jurisdictions. The InternationalFederation of Phonogram and Videogram Producers (IFPI), an internationalrecord industry organization representing nearly 1500 record producers in 75countries, has actively promoted litigation against file sharers. In April 2005,the CEO of IFPI, John Kennedy announced 950 new actions in 11 countriesagainst file sharers. In April 2006, nearly 2000 new actions in 10 countriesaround the world were announced and by the end of 2006 legal actions werebrought by IFPI affiliates against more than 10,000 individuals in 18 coun-tries, including Brazil, Mexico, Poland and Portugal for the first time. TheIFPI reproduce survey evidence that in Germany, for example, the proportionof Internet users frequently file sharing copyright music fell back from 13 percent in 2004 to ‘just’ 8 per cent in 2006. While in the UK, the percentage inboth 2004 and 2006 is some 11 per cent of Internet users.79 The use of thecourts to both educate and deter, a key consideration in IFPI strategy is highlyvisible but these claims to effectiveness are hard to measure.

It may be doubted whether these actions have this effect, at least in termsof the statistics. The Internet measurement company Big Champagne esti-mated that those engaged in P2P activity more than doubled from an estimated


78 The US music industry apparently conceded that, if a music CD is lawfullypurchased, it will be lawful for the purchaser to load it onto a PC or MP3 player, butcopyright legislation in the USA and elsewhere does not reflect this. See comment byDB Verrilli, Counsel for MGM in Grokster, cited by Ganley [2006] EIPR 15 [19].

79 IFPI: 07 Digital Music Report p. 18.

4,319,182 in September 2003 to 9,284,558 in September 2005.80 Even at thelevel of national enforcement, civil actions may only have a temporary impact.For example, in Ireland, high profile proceedings brought against 17 allegedcopyright infringers led to a judgment ordering ISPs to give the names andaddresses of those individuals to the recording industry. The plaintiffs them-selves conceded81 that, while the campaign culminating in that judgment hadsome deterrent effect in early 2005, by July–September 2005 file sharing hadactually increased, leading to a second round of actions against new down-loaders. Even judges have opined that actions against users may not producea deterrent effect. Wilcox J in Sharman considered that few Kazaa users knewor even cared about copyright law and that pursuit of individuals was ulti-mately a futile exercise.82

This tactic was undoubtedly used by industry in response to the negativedecisions handed down in several high profile actions against Kazaa in theNetherlands, as well as to the position taken in the US courts beforeGrokster in June 2005. While Grokster and Sharman suggest that actionsagainst software distributors now have an increased chance of success, therecord industry appears to continue pursuing file sharers. However, thepursuit of ‘serial infringers’ is expensive, time-consuming, and potentiallylegally complex.

ANONYMITY AND THE INTERNET

The file sharer’s identity is initially unknown to the right holder who hasreason to believe that a user is engaged in illegal file sharing. The right holdermust formulate a legal basis upon how to obtain the name and address of thesubscriber from the ISP with whom the subscriber has contracted. In thecommon law world, applications to require an ISP to reveal the name andaddress of the subscriber rely on civil procedural rules of discovery, as inCanada,83 or because the ISP is in possession of information which it isrequired to disclose. In the UK, an application procedure has evolved from theseminal decision in Norwich Pharmacal v Customs and ExciseCommissioners84 in which the House of Lords ruled that a person who, even


80 See www.pcpro.co.uk/news/.81 Statement to High Court, Dublin, 23 January 2006.82 (2005) 65 IPR 289 at 372 per Wilcox J.83 See the equitable Civil Bill procedure in BMG Canada Inc. v John Doe (2005)

252 DLR (4th) 726.84 [1974] AC 13.

innocently,85 gets mixed up in wrongdoing is obliged to assist the injured partyby providing information about the identity of other persons, or other vitalinformation.86 The remedy is flexible: the courts set off the interest in ensur-ing that justice is done against the need87 not to involve third parties in avoid-able litigation.

The Irish Norwich Pharmacal File-sharing Decision

The balancing exercise required for Norwich Pharmacal applications takes ona specific character where the application is brought against ISPs.

In the context of file sharing, case law establishes that an ISP is not liablefor copyright infringement by others88 (the transposition of the ElectronicCommerce Directive89 affords ISPs in Ireland and elsewhere in the EU with astatutory immunity from liability for copyright infringement). But immunitydoes not excuse an ISP from compliance with the notice and take down proce-dure to remove infringing files from servers, given that such procedures havelittle or no impact upon the availability of identical files posted on otherservers.

ISPs are engaged in the telecommunications industry. Irish law, for exam-ple, recognizes that, in respect of the provision of telecommunications servicesto citizens, the expectation of privacy enjoys constitutional status90 and isafforded through statute.91 While Irish case law suggests the privacy rightarises in the context of voice telephony, there is no reason to confine that right.The Data Protection Acts 1988–2003 recognise that the right to privacy ofpersonal data must be respected through the data protection principles, inparticular that personal data must not be disclosed for purposes other than


85 The relief is available against wrongdoers also: CHC Software Care vHopkins and Wood [1993] FSR 241; Arsenal Football Club plc v Elite Sports [2003]FSR 26.

86 Carlton Film Distributors Ltd v MGN Ltd [2002] FSR 47.87 Ashworth Hospital Authority v MGN Ltd [2002] 1 WLR 2003; Mitsui & Co.

Ltd v Nexen Petroleum UK Ltd [2005] EWHC 625 (Ch).88 See e.g. Perathoner v S. Joseph Société Free [2003] ECDR 76; Church of

Spiritual Technology v Dataweb BV [2004] ECDR 258.89 Directive 2000/31, as transposed by SI 68 of 2003 in Ireland and by SI2002/

2013 in the UK.90 See Kennedy v Ireland [1987] IR 587; Haughey v Moriarty [1999]3 IR 1;

Cogley v RTE [2005] 2 ICRH 529.91 Section 98 of the Postal and Telecommunications Services Act 1983 makes it

an offence, without lawful authority, to intercept a telecommunications message. On 7July 2006, the Irish Government published a Privacy Bill (no 44 of 2006) that intro-duces a statutory tort of violation of privacy. A relevant defence is that the action wasundertaken by way of court (or other lawful) process – clause 5(1)(b).

those for which the personal data was legitimately obtained. Other data protec-tion principles such as the security principle are also relevant.

The fact that ISPs may compile user records that reveal a considerableamount of information about an individual user was recognized in 2001 whenthe Irish government added ISPs to the list of data controllers who must regis-ter with the Data Protection Commissioner.92 In BMG Canada Inc v JohnDoe,93 the Canadian Federal Court of Appeal indicated that the balancebetween the protection of privacy and the rights of intellectual propertyowners would generally turn upon the force of the perceived threat to theintegrity of intellectual property rights. BMG Canada Inc. sought NorwichPharmacal-type orders against numerous ISPs (the applicants). Having identi-fied 29 file sharers who had each downloaded over 1000 songs, BMG soughtthe names and addresses of those persons, providing the ISPs with the users’pseudonyms.94 Noting that the traditional Norwich Pharmacal approachrequires a balance between maintaining the integrity of confidential informa-tion and the protection of clearly established intellectual property rights whichhave been infringed, the Court lowered the threshold by requiring the plaintiffto establish a bona fide claim to be pursued and not a prima facie case ofinfringement of an intellectual property right. Sexton JA reasoned:

Intellectual Property laws originated in order to protect the promulgation of ideas.Copyright law provides incentives for innovators – artists, musicians, inventors,writers, performers and marketers to create. It is designed to ensure that ideas areexpressed and developed instead of remaining dormant. Individuals need to beencouraged to develop their own talents and personal expression of artistic ideas,including music. If they are robbed of the fruits of their efforts, their incentive toexpress their ideas in tangible form is diminished.

Modern technology such as the Internet has provided extraordinary benefits forsociety, which includes faster and more efficient means of communication to wideraudiences. This technology must not be allowed to obliterate those personal prop-erty rights which society has deemed important. Although privacy concerns mustalso be considered, it seems to me that they must yield to public concerns for theprotection of intellectual property rights in situations where infringement threatensto erode those rights.95

Sexton JA emphasized that, if privacy rights are to be invaded, they must beinvaded in the most minimal way. The order is unlikely to be granted if theapplicant’s proofs reveal a time lag between the investigation and the applica-tion because of the risk of ‘stale’ evidence of identity.


92 SI 2001/2.93 (2005) 39 CPR (4th) 97 and (2005) 252 DLR (4th) 726, reversing the Motions

Court decision at (2004) 239 DLR (4th) 726.94 See e.g. [email protected] (2005) 39 CPR (4th) 97 at 115.

In making the order, the Court may be expected to impose strict conditionsupon the applicant. In BMG Canada, the Federal Court stressed that the infor-mation disclosed should not be unrelated to copyright infringement and thatspecific directions should be given as to the type of information disclosed andits manner of use. Privacy should be respected by an order that the user beidentified by initials or protected by a confidentiality order. Kelly J endorsedthis approach in the Irish High Court in EMI Records (Ireland) Ltd and Othersv Eircom Ltd and BT Communications Ireland Ltd96 where four major recordcompanies sought Norwich Pharmacal orders in respect of 17 habitual down-loaders. Granting the orders, Kelly J found that the plaintiffs had establishedprima facie infringement and that no other recourse was available to obtain thenames and addresses of the users. Noting the importance of duties of confi-dentiality owed by the defendants to their subscribers and the subscribers’rights of privacy, Kelly J held that these duties and rights:

cannot be relied on by a wrongdoer or a person against whom there is evidence ofwrongdoing to protect his or her identity. The right to privacy or confidentiality ofidentity must give way where there is prima facie evidence of wrong doing.97

Kelly J then built ‘safeguards’ into the order. The plaintiffs were required toundertake to use the information disclosed in compliance with the order onlyto obtain redress in respect of copyright infringement in the sound recordingscovered by the plaintiff ’s Irish license; thus, indicating that the informationcould not be transferred to a UK or US counterpart. The plaintiffs also under-took not to disclose the identities of the subscribers until the plaintiffs beganto enforce their copyrights against those persons. Kelly J explained:

This is being done in protection of the rights and entitlements of the subscribersbecause it may turn out that they were not in fact guilty of any wrongdoing or thatthe named person was not the operator at the time when the wrongdoing was in factcarried out.98

The defendants were held entitled to costs of the action (including the costsof actually making the disclosure) from the applicant.99


96 [2006] ECDR 40. For a robust Hong Kong counterpart, see Cineplay RecordsCo Ltd v Hong Kong Broadband Network Ltd [2006] 1 HKLRD 255.

97 Ibid 43.98 Ibid 44. A second phase of actions commenced in late 2005, culminating in

similar orders being made on 26 January 2006 (unreported).99 Following the Court of Appeal (England and Wales) in Totalise plc v Motley

Fool Ltd and Interactive Investor [2001] EWCA Civ 1897. A second set of proceedingsbrought in the Irish High Court in 2007 led to disclosure orders against seven ISPs: seeIRMA to get web users’ details’ Irish Times 8 June 2007.

Some European Decisions on Discovery of Identity Orders

While these applications are part of the general law in the common law world,similar mechanisms are found in other jurisdictions. The Dutch courts haveconsidered whether they have power to compel ISPs to disclose the identity ofsubscribers. The first such case was BREIN and others v UPC Nederland BV,trading as Chello and Others.100 BREIN, an authors’ collecting society, actingin conjunction with 50 record companies, sought orders against five ISPs forthe names and addresses of file sharers with whom the ISPs had contracts andto whom IP addresses has been allocated. The Utrecht Court ruled that boththe Electronic Commerce Directive101 and the Enforcement Directive,102 aswell as Art. 6:196c of the Dutch Civil Code, required disclosure; even withouta statutory basis for the application, ‘under special circumstances it may beunlawful vis-à-vis Brein to refuse to make known these details because itconstitutes a violation of a social obligation to exhibit due care that a serviceprovider must bear in mind’. A later Dutch Supreme Court decision, Lycos vPessers,103 upheld the decision of the Court of Appeal as to whether a generalduty exists. The Supreme Court endorsed this four criteria test:

1. it must be sufficiently plausible that the information is wrongful andharmful;

2. the third party must have a real interest in the information;3. it must be plausible that the injured party does not have a less drastic

method to retrieve the information; and4. the interests at stake of the third party, the provider and the website owner

must be weighed and the third party’s interest must prevail.

These Dutch decisions are important because they demonstrate that the rightto operate as an ISP can involve the observance of a duty of care and that theElectronic Commerce Directive far from creating an immunity in respect ofthese operations, will incline in the opposite direction. Recent Italian case lawhad inclined in favour of ISP disclosure orders although a definitive appellatedecision is expected shortly.104


100 Decision of the District Court of Utrecht of 12 July 2005, judgment translatedinto English by SOLV Advocaten: www.solv.nl.

101 2000/31.102 2004/48.103 Decision of 25 November 2005. See the February 2006 newsletter of

Kennedy Van der Laan available at www.kvdl.nl.104 See Prosperetti [2007] Ent. L.R. 280.

The Privacy Interest

It is widely reported that the French Data Protection Authority has ruled105

that the automated monitoring of users of P2P file-sharing systems may not bepermitted as it results in the accumulation of ‘a massive collection of personaldata’ on the basis of exhaustive and continuous surveillance’ of P2P sites thatgoes ‘beyond that which is necessary for the fight against piracy’. [While theimpact of the new French Copyright law remains to be assessed, the IFPI isoptimistic106 that data protection law does not bar discovery of identity ordersin French courts.]

In contrast, when the issue of a right holder’s ability to compel disclosureof the details of the person standing behind an IP address arises, personalprivacy arguments have not succeeded in either the Irish or Canadian courts.In particular, the view of the English and Irish courts is that, because dataprotection legislation in each jurisdiction permits personal data to be obtainedfollowing court orders,107 as long as the right holder uses a NorwichPharmacal or similar civil procedure,108 the ISP will be able to disclosepersonal data about suspected file sharers. In EMI v Eircom109 Kelly J said, ofthe rights of privacy:

the statutory entitlements, whether they arise under the Data Protection legislationof the Postal and telecommunications legislation are subject to a provision whichpermits the confidentiality to be legitimately breached by an order of the Court.110

While he conceded that the law did not prescribe the conditions under whichan order may be made, the ‘necessity’ test vis-à-vis Norwich Pharmacal isflexible enough to afford a basis for such an order.

What may remain unexplored is the difficulty right holders may have insome jurisdictions in collecting evidence. Case law suggests that the standardmethodology is to engage the US agency MediaSentry to monitor volume usesof MP3 files, taking a 10 minute snapshot of real-time users in order to identify


105 CNIL decision, 24 October 2005. See generally Richardson (2002) 13 JLIS 90on misuse of discovery procedures.

106 See www.ifpi.org. A more pertinent issue is the survival of the private copy-ing defence under French law, the current debate being reviewed by Hugo and Hugot[2006] Ent L. R. 139.

107 Data Protection Act 1998, s. 35 (UK); Data Protection Act 1988, s. 8(e)(Ireland).

108 See e.g. the relevant rules of civil procedure, discovery, etc. In England andWales, see the Civil Procedure Rules.

109 [2006] ECDR 40.110 Ibid 43.

potentially infringing file sharers on a high volume basis. In BREIN, thecollection of personal data by MediaSentry on behalf of BREIN was heldunlawful as MediaSentry had not signed up to the EU/US Safe HarbourAgreement. The Utrecht Court’s ruling was upheld on appeal on the basis ofMediaSentry’s infringement of privacy and because the agency’s software wasnot sophisticated enough to identify users or acts of infringement correctly.111

This manner in which information is collected was also considered inSharman, when Wilcox J put it to the MediaSentry witness: ‘so what you aredoing is, you are in effect spying on a person who is in the act of download-ing’.112

In the context of Irish law, intrusive methods of collecting data may bechallengeable under the privacy provisions in the EU TelecommunicationsData Protection Directive,113 as well as under the constitutional guarantee ofprivacy in respect of the communication of messages.114 It is also uncertainwhether right holders are illegally using telecommunications technology tointercept communications as MediaSentry, at the time of the interception,clearly had no authority to do this. Thus, one may need to distinguish betweenactivities that employ privacy intrusive techniques to collect evidence115 (nolegal process having yet taken place) and a subsequent court application tocomplete the chain of evidence, to secure the names and addresses of personsbehind the IP address. In the former case, serious statutory and constitutionallaw issues may need to be addressed.116 Until more light is cast on the meth-ods of data collection used initially to identify suspects by organizations suchas MediaSentry, this uncertainty will remain.

At the level of national law, some European jurisdictions are alive to thepossibility that right holders may seek to use rules of criminal procedure tocompel the disclosure of personal data relating to suspected file sharers. For


111 Available at www.theregister.com/2006/07/14fileswappers_protected.112 (2005) 65 IPR 289 at 348. The evidence admitted in Sharman revealed for

example that users may be able to shelter behind firewalls. Some software applicationsto ensure anonymity are being researched. See e.g. www.freenet.sourceforge.net andwww.relakks.com; Comber and Staple [2007] ECL & P 9(7), 9–11.

113 2002/58, as amended by Directive 2006/24, transposed in Ireland by SI2003/535; for UK transposition see SI 2003/2426.

114 Kennedy v Ireland [1987] IR 587; Atherton v DPP [2006] 2 ILRM 153.115 In the UK, see the Regulation of Investigatory Powers Act 2000, ss. 1–2.116 For example, if the evidence is illegally or unconstitutionally obtained,

English law contains an exclusionary discretion, case law indicating that any privacyintrusion is a relevant consideration for the court: see Jones v University of Warwick[2003] 3 All ER 760. In Irish law, there is a discretion in relation to illegally obtainedevidence but a complete bar in unconstitutionally obtained evidence: see McGrath,Evidence (2005) Chapter 7. The leading case is Universal City Studios v Mulligan[1999] 3 IR 392.

example, even taking applications at face value, some German prosecutorshave balanced the nature of the criminal offences relating to unlawful file shar-ing – often characterised as minor offences – with the need to protect personalprivacy, finding that the balance rests in favour of refusing to order disclosure.Just as important is a willingness to look behind the criminal application inorder to test the real motives of the right holder. The chief public prosecutorfor Berlin, in an opinion dated 18 October 2006 accused the right holders oftrying ‘under cover of pretending to want to initiate criminal proceedings toobtain for free and by exploiting the limited resources of the prosecutingauthorities and at the expense of the budget of the federal state of Berlin thepersonal data required for the successful pursuit of civil claims’.117

This balance has been recently explored by Advocate General Kokott, inProductores de Musica de Espana Promusicae v Telefonica de Espana Sau.118

The net point that the Advocate General’s Opinion makes is that Communitylaw does not require that the privacy protections afforded by Directives95/46/EC and 2002/58/EC are to be superseded by Enforcement Directive2004/48/EC unless one of the overriding considerations in Art. 15(1) ofDirective 2002/58/EC are satisfied such as public security or the investigationof criminal offences, although the Opinion is not very compelling on this pointas Spanish law did not render file sharing a criminal offence, per se. Whatremains to be seen is whether the European Court of Justice will read into theprocess of reconciling the Enforcement Directive with the Data ProtectionDirectives a requirement of proportionality: will the ECJ follow theIrish/Dutch view that file sharing is such a serious threat to property rights soas to require data protection to be brushed aside, or will a more cautiousapproach prevail, such as that favoured in Germany where infringementoffences are not seen as heinous and the right holder is encouraged to pursuecivil reliefs rather than seeking to transfer enforcement costs to the publicpurse in the form of ‘bogus’ criminal proceedings. It is of course in the verynature of right holders to lobby and press for greater clarity in the law and itmight be that right holders may be aware that some collection techniques arelegally suspect. In November 2005, the Creative and Media Business Allianceattempted to persuade the members of the European Parliament to extend thedraft Data Protection Directive119 to cover offences that arise from copyrightinfringement. This attempt failed,120 the lobbying being attacked as both an


117 http//www.heise.de/English/newsticker/news/93759.118 Case C – 275/06: Summarised at [2007] ECDR 390.119 In 2005, the European Institutions put forward two texts, a Framework deci-

sion and a draft Directive. The Framework decision was rejected by the EuropeanParliament.

120 The obligations to retain data and provide such data is reserved for ‘the

infringement of civil liberties and an attempt to transfer the cost of protectingcopyright from well funded industries to European taxpayers and telecomssubscribers.121

The advantage of data retention laws is that no court application is neces-sary – the entire process operates in a secretive environment. Lumping evenserial file sharers into the same category as members of al-Qaeda shows justhow irrational the file-sharers debate has become. Nevertheless, in the UK, thepursuit of individual file sharers continues.122 The British PhonographicIndustry launched a campaign to require disclosure of the names and addressesof 31 subscribers whose IP addresses had been used to engage in high volumefile sharing in May 2005; while some subscribers settled subsequent claims fordamages – estimated at around £2500 – others did not.123 The High Court laterordered two men to pay a combined amount of £6500 in damages after bothwere held to have infringed the claimants’ sound recording copyrights. Asecond phase of infringement proceedings commenced in December 2005against another list of suspected file sharers.124

FILE SHARING: ISPS IN THE DOCK

Until recently, the position of ISPs in Europe has been relatively comfortable,enjoying a degree of immunity from liability due to the Electronic CommerceDirective and a widespread belief that ISPs have little or no knowledge orcontrol over materials hosted or accessed by users of their services. BREIN inthe Netherlands, and a highly publicized decision of the Danish SupremeCourt, have raised the conflict to another level. In the Danish decision, theDanish Supreme Court ordered the telecommunications company TDC to


competent national authorities’: Directive 2006/24 on the retention of data generated orprocessed in connection with the provision of publicly available electronic communi-cations services or of public communications networks, 15 March 2006.

121 See Music Industry seeks access to private data to fight piracy, The Guardian,26 November 2005; Entertainment Industry trying to hijack data retention directive,available at www.news.zdnet.co.uk.

122 This has attracted considerable publicity and comment, for example, in TheGuardian, 25 June 2005, and in particular ‘Is your child an Internet pirate? That’ll be£4000’ The Times, 7 June 2005.

123 Subsequent claims for £4000 in damages were brought.124 Apart from music file-sharing actions brought by the music industry, the

Federation Against Software Theft (FAST) obtained court orders against 10 ISPs,including Tiscali, BT, and Telewest requiring disclosure of the identities of personswho had loaded illegal software onto the networks of these ISPs: see theregister.co.uk,1 February 2006 and ‘On the FAST Track to Success’, Copyright World No. 158,March 2006, p. 9.

discontinue the provision of services to subscribers who, rightholdersbelieved, engaged in file sharing, with an injunction being granted to therightholders if the ISP should fail to react expeditiously.125 More recently, theBritish Phonographic Industry (BPI) provided Tiscali with 17 subscribers’ IPaddresses and Cable and Wireless with 42 IP addresses, which BPI believedwere used for P2P file sharing. BPI did not seek Norwich Pharmacal relief,but proceeded directly to the ‘cease and desist’ provisions in the ElectronicCommerce Directive:

Both Tiscali and Cable & Wireless state in their terms of use for subscribers thatInternet accounts should not be used for copyright infringement,’ said BPI generalcounsel Roz Groome. ‘We now invite them to enforce their own terms of use.126

Tiscali responded that the information provided is not evidence of infringe-ment and that, without a court order, Tiscali will respect the privacy and dataprotection rights of its subscribers.127

Again, ISPs are in a difficult position. While an ISP must act expeditiously,must it take the right holder at its word? Under the standard cease and desistcase law in the UK,128 the person served with the notice must have the oppor-tunity both to consult the alleged infringer and to take legal advice; it is hopedthat this is part of the notice and take down procedure under the ElectronicCommerce Directive. Further, it would be appropriate for the right holder toagree to indemnify the ISP in the event of the complaint against the subscriberbeing ill-founded. However, without, any judicial process, it is difficult to seehow this mechanism can evolve. It is perhaps best if the courts continue torequire right holders to employ discovery or Norwich Pharamacal principles,possibly allowing the court to hold that there is sufficient prima facie evidenceof infringement to warrant withdrawal of service to the user. The integrationof discovery or Norwich Pharmacal procedures into notice and take downpowers may be expensive and cumbersome but any alternative puts ISPs in apredicament.


125 Court ruling confirms Internet Service Providers must act to stop piracy,available at www.ifpi.org/site-content/PRESS20060215.html.

126 Available at www.pcpro.co.uk/news/90078/bpi-pressures-isps-to-suspend-filesharing-accounts.html?searchString=news+90078 (last accessed 1 November2008).

127 Available at www.pcpro.co.uk/news/bpi-pressures-isps-to-suspend-filesharing-accounts.html?searchString=news+90078 (last accessed 1 November2008). Tiscali instead provided evidence of infringement in the form of screenshots anduser connections.

128 Infabrics Ltd v Jaytex Shirt Co [1978] FSR 451; Vermaat v Boncrest (No 2)[2002] FSR 21.

Is this all worth the effort? Serial file sharers can be expected to take outnew subscriptions with other ISPs, change IP addresses, and resort to firewallsand other technical ways of avoiding detection. Research projects in thepipeline will allow users to go online with some assurance of privacy129 whilethe encryption of files raises the computer forensics exercise to a new level.But the music and entertainment industries must be seen to be doing some-thing to tackle the P2P problem130 and the emphasis that the recording indus-try appears to be placing on ISPs seeks to both erode the safe harbourimmunities and make ISPs civilly and even criminally liable for third-partywrongdoings.131 Some organisations in the UK are pressing for the expansionof copyright in the form of a ‘value recognition right’ that would make ‘unli-censed’ ISPs liable in damages for third-party file sharing amongst itscustomers, and while this initiative is unlikely to progress, the record industrymay be getting its way via a more indirect route.

The Weakening of ISP Immunity in UK Law

In Bunt v Tilley,132 Eady J noted concern over distinguishing between the shel-ter from damages and penal sanctions that the Electronic Commerce Directiveaffords, while leaving open the exposure to injunctive reliefs that the Directivedoes not close down; the ISP defendants were not party to meaningful injunc-tive proceedings in that case, and on the facts, Eady J held that injunctive reliefwould not have been forthcoming as the ISPs had cancelled contracts andtaken other remedial measures anyway. But within the UK, the signs are thatthe ISP ‘immunity’ is unlikely to survive for much longer. This is not simplybecause of judicial proceedings such as the Bunt v Tilley dicta or the 2006Tiscali proceedings, outlined above. A number of straws in the wind are point-ing towards a convergence of technical ‘solutions’ and a changing regulatoryclimate. In 2005, the (then) UK Department of Trade and Industry (DTI) initi-ated a consultation exercise133 on the possibility of expanding ‘mere conduit’type immunities to hyperlinkers and the providers of location tool services and


129 See footnote 112 above.130 The use of software such as BitTorrent to transfer files containing television

programmes and films, as well as music, is the most highly visible example of P2P filesharing, but actions are being brought against BitTorrent entrepreneurs. BREIN closeddown the Dutch BitTorrent site Torrentit.com in April 2006, only one of many success-ful BREIN actions.

131 See Henry [2007] Ent L.R. N-7.132 [2006] EWHC 407 QB.133 DTI Consultation document on the Electronic Commerce Directive:

www.berr.gov.uk/files/file13986.pdf.

data content aggregators, but the DTI concluded134 that there was insufficientevidence to justify the expansion of any ‘safe harbour’ immunity. Indeed,industry had expanded, even absent such immunity, and it may be that thisconclusion has contributed to an ‘awareness’ that the Electronic CommerceDirective of 2000 does more than is actually necessary to stimulate the growthof the Information Society.

A parallel development from the area of child pornography and Internetcontent regulation has also fuelled the view that ISP ‘immunity’ is in need ofrevision. The UK, in 1996, established the Internet Watch Foundation (IWF)charged with developing a safer Internet environment, specifically in relationto counteracting on-line child pornography. In 2004, the largest ISP, BritishTelecom, launched BT Cleanfeed, a blocking service that relies upon the IWFproviding a list of URLs, on a daily basis, and Cleanfeed blocking access tosuspect sites on the list. This ‘blocking’ technology is regarded by critics asbeing crude and mechanical, but it has caught the attention of both the publicand law enforcement as having a measure of effectiveness. In fact, the GowersReview on Intellectual Property, published in 2006,135 clearly had one eye onthis kind of ‘technology’ when recommending the development of a negoti-ated code of practice between UK rightholders and ISPs, setting a deadline ofone year for such a code to emerge. More recently still, the House of LordsScience and Technology Committee, in its report, Personal Internet Security,published on 10 August 2007,136 suggested that it is now appropriate ‘to takea nibble out of the blanket immunity’137 afforded by the ‘mere conduit’defence. This recommendation was framed in the context of requiring ISPs tomonitor customer traffic that may, perhaps unwittingly, contain a virus orspam. The Science and Technology Committee took the view that it is unreal-istic to place the onus for ensuring Internet service safety onto the shouldersof the end-user. The Committee recommended, at paragraph 3.69 that:

the ‘mere’ conduit immunity should be removed once ISPs have detected or beennotified of the fact that machines on their network are sending out spam or infectedcode. This would give third parties harmed by infected machines the opportunity torecover damages from the ISP responsible. However, in order not to discourageISPs from monitoring outgoing traffic proactively, they should enjoy a time-limitedimmunity when they have themselves detected the problem.


134 Summary of responses, December 2006 www.dti.gov.uk/files/file35905.pdf.135 Gowers Review of Intellectual Property 2006, available at www.hm-treasury.

gov.uk: see photographs 5.99 and 5.100 and recommendation 39.136 HL Paper 165-I.137 The phrase is attributed to Zittrain in paragraph 3.62, see Zittrain (2006) 119

Harvard Law Review 2029.

What we are witnessing here is a not-so-subtle shift away from the principlethat merely providing a facility that might be used by others to infringe thecriminal or civil law will not, of itself, produce liability for the serviceprovider. This principle is apparently being replaced with a statistical analysisof levels of illegal Internet traffic, informed by technical evidence that someforms of blocking or filtering will diminish the flow of illegal music or audio-visual files. When this analysis is combined with evidence that an ISP is indif-ferent to file-sharing activities and that the ISP could adopt countervailingmeasures (in terms of practical steps and actions that would be contractuallypossible), the fact that an actual complaint may have been made is likely toderail any ‘mere conduit’ defence.

The SABAM v Scarlet Decisions

Insofar as injunctive relief is sought to this extent, the controversial deci-sion SCRL Société Belge des Auteurs Compositeurs et Editeurs v SAScarlet138 may be a harbinger of the Europe-wide emasculation of theElectronic Commerce Directive safe harbours. Here, the plaintiff, SABAM,obtained judgment against Tiscali, later renamed as Scarlet, in November2004 as a result of cease and desist proceedings brought against Tiscali asan ISP whose network was being used by third parties for P2P file sharingof illegal music files. The Brussels Court of First Instance appointed anexpert to advise on technical measures that Tiscali could adopt to stop copy-right infringement by users. Although the expert noted that the most appro-priate form of filtering technology, Copysense Network Appliances’Audible Magic, was educational software not designed to deal with ISPtraffic or encrypted files, the Court noted that MySpace and Microsoft hadeither used or announced an intention to use Audible Magic. The Court alsobrushed aside evidence that the software in question could throw up falsepositives (that is, block legitimate transmissions) and found that the cost ofinstallation (some Û0.50 per subscriber per month over a three-year period)meant that a technical solution was possible, giving Tiscali six months toinstall the relevant technical solution. The Court indicated that this decisiondid not set aside the Electronic Commerce Directive’s provision that an ISPhas no duty to monitor content, noting that the Directive does not touchupon the jurisdiction of a ‘cease and desist’ judge and that Recital 40 of theDirective specifically approves of ‘technical surveillance instruments’. Thisdecision is under appeal. While distinguishing immunity from damages and


138 [2006] EWHC 407 QB.

criminal sanctions from injunctive relief was legitimate – Eady J in Bunt vTilley139 did much the same – the Brussels Court, by imposing a penalty ofÛ25,000 per day if the technical surveillance solution was not in place,somewhat erodes the distinction. Other European jurisdictions such as Italyhave also produced similar results in case law, the cases also being underappeal.140

In the United Kingdom in recent months, there have been industry ledinitiatives and a number of Government reports seeking to clear the way for afile sharing solution. On 29 January 2009, the Government published DigitalBritain: Interim Report, promoting the idea of a ‘Rights Agency’ to facilitatestakeholder led solutions. The report also suggests ISPs become proactive ininforming right holders about suspected illegal file sharing. In Ireland, recentlitigation between EMI and Eircom, Ireland’s largest ISP, has gone evenfurther. EMI started this litigation looking for blocking software to be put onEircom’s network the Scarlet litigation being cited. The case was settled withEircom agreeing a ‘three strikes’ solution, subscribers being afforded anumber of opportunities to challenge allegations of misuse, with disconnec-tion being the ultimate sanction in appropriate and practicable cases. OtherIrish ISPs are under pressure to give similar undertakings to those found in the28 January 2009 Eircopme settlement, specific reference being made todisabling access to Pirate Bay in correspondence originating from Irish recordindustry lawyers.

CONCLUSIONS: WHERE ARE WE NOW?

A review of the impact of the Electronic Commerce Directive is to bepublished by the European Commission. The review must address the rela-tionship between that Directive and the community acquis on data protectionas well as the Enforcement Directive. The Opinion of the Advocate Generalin Telefonica141 is helpful in this regard, but it suggests that national laws arecapable of being used to allow a civil procedure to require ISPs to disclosesubscriber details and, as we have seen from the Irish and Dutch cases, bothdata protection and anti-wiretapping legislation at the national level tend tobe subordinated to the interests of the music industry. There is an even morefundamental objection to the direction that the law is going in. The distinc-tion between P2P software distributors and ISPs is being overlooked.Software distributors like Kazaa rely upon a business model that requires


139 [2007] ECDR 320.140 Prosperetti [2007] Ent L.R. 280.141 [2007] ECDR 390.

file sharing to take place; such entities encourage and incite file sharing – inthe language of Irish and UK copyright law, they ‘authorise’ others toinfringe. Unlike ISPs, such entities are not permitted to resort to the ‘safeharbour’ of the Electronic Commerce Directive. On the other hand, the ISPshould not monitor content. But as a result of the SABAM decision, the ISPnow only has to be served a notice that illegal content is being transmittedvia its service and, if evidence of some kind of technical solution ispresented, the ISP will not only have to install it, the ISP will have to chargeits subcribers also. The convergence of the reasoning in the AustralianSharman142 case and the Belgian SABAM decision overlooks the criticaldifferences in relation to culpability, and in jurisprudential terms, underval-ues and threatens civil liberties. All the right holder needs to invoke areinjunctive proceedings in order to sidestep the Electronic CommerceDirective and impose upon an ISP proactive duties to place filtering tech-nology onto the ISPs services – and pay for it too. Add to this mixture theconfusion at the level of national law and criminal and civil litigation, and itis hard not to escape the conclusion that single market harmonization ofIntermediary Service Providers through the Electronic Commerce Directivehas been a complete failure.


142 (2005) 65 IPR 289.

8. A reverse notice and takedown regimeto enable public interest uses oftechnically protected copyrightedworks

Jerome H. Reichman, Graeme B. Dinwoodieand Pamela Samuelson*

The WIPO Copyright Treaty (WCT), concluded in 1996, recognizes ‘the needto maintain a balance between the rights of authors and the larger public inter-est, particularly education, research and access to information’ in updatinginternational copyright norms to respond to challenges arising from advancesin information and communications technologies, including global digitalnetworks.1 The WCT implements this balance by affirming that existingexclusive rights, as well as exceptions to and limitations on those rights, canand should be applied to copyrighted works in digital forms.2 Indeed, nations

229

* A prior version of this chapter appeared in (2007) Berkeley Technology LawJournal, 22 (Summer), pp. 981–1060. This chapter is based in part on a paper entitled‘Digital Copyright: Third Party Liability and The Outer Limits of Protection,’ whichProfessor Reichman initially wrote and presented at a SOFTIC conference in Tokyo,Japan, in November 2005. The authors wish to thank Thomas Kearney and AssadRajani for their valuable research assistance. Professor Reichman also gratefullyacknowledges the support of the National Human Genome Research Institute and theDepartment of Energy (CEER Grant P50 HG003391, Duke University Center ofExcellence for ELSI Research).

1 WIPO Copyright Treaty, Preamble, 20 December 1996, WIPO Doc.CRNR/DC/94, available at http://www.wipo.int/documents/en/diplconf/distrib/pdf/94dc.pdf [hereinafter WCT].

2 Id., Arts. 6–8; Agreed Statements Concerning the WIPO Copyright Treaty,statement concerning Art. 1(4), Dec. 20, 1996, WIPO Doc. CRNR/DC/96 (published23 December 1996), available at http://www.wipo.int/documents/en/diplconf/distrib/pdf/96dc.pdf [hereinafter Agreed Statements]. The WCT also reflects an inter-national consensus that nations are entitled ‘to carry forward and appropriately extendinto the digital environment limitations and exceptions in their national laws whichhave been considered acceptable under the Berne Convention.’ Id., statement concern-ing Art. 10.

are free ‘to devise new exceptions and limitations that are appropriate in thedigital network environment.’3

The treaty also calls for nations to ‘provide adequate legal protection andeffective legal remedies against the circumvention of effective technologicalmeasures that are used by authors in connection with the exercise of theirrights,’4 although such rules should not impede acts that are ‘permitted by law’or otherwise beyond the authority of copyright owners.5 The treaty gives noguidance, however, about how nations might implement this anti-circumven-tion norm so as to enable privileged and other public interest uses of copy-righted works.

While the WCT embodies a negotiated balance between copyright ownersand users of digital works, the translation of this balance into the domesticlaws of the United States and the member states of the European Union hasnot been fully successful.6 When enacting the Digital Millennium CopyrightAct (DMCA) of 1998 as the US implementation of the WCT,7 Congressachieved a reasonable balance of competing interests in its creation of safeharbours from copyright liability for Internet service providers and other inter-mediaries for the infringing acts of others.8 However, contrary to its apparentintention, Congress failed to achieve a similar balance of interests when estab-lishing new rules forbidding circumvention of technical protection measures(TPMs) used by copyright owners to control access to their works and in regu-lating the manufacture and distribution of technologies primarily designed orproduced to enable circumvention of copyright-protective TPMs.9


3 Agreed Statements, supra n. 2, statement concerning Art. 10.4 WCT, Art. 11. See, e.g., Pamela Samuelson, The US Digital Agenda at WIPO,

37 Va. J. Int’l L. 369, 409–15 (1997) (discussing the evolution of the WCT anti-circum-vention provision).

5 WCT, Art. 11.6 Maintaining a balance between the interests of copyright owners in having

adequate protection for their works and the public in having access to and the freedomto use these works in non-infringing ways has long been a ‘bedrock principle’ of UScopyright law and policy. See, e.g., H.R. Rep. No. 105–551, at 18 (1998); ChamberlainGroup, Inc. v Skylink Techs., Inc., 381 F.3d 1178, 1196 (Fed. Cir. 2004) (quotinglegislative history of the DMCA).

7 Digital Millennium Copyright Act, Pub. L. No. 105–304, 112 Stat. 2860(1998) (anti-circumvention rules codified at 17 USC. § 1201).

8 17 USC. § 512 (2000).9 17 USC. § 1201 (2000). ‘Checks and balances in the ISP safe harbours and

anti-circumvention rules’ (at p. 234) will discuss various limitations on and exceptionsto the DMCA anti-circumvention rules, including authorization of the Library ofCongress to develop new exceptions and limitations; it will also show that these limi-tations and exceptions do not accomplish the needed balance.

Although the EU followed the US lead in adopting DMCA-like rules thatforbid circumvention and trafficking in circumvention tools,10 it divergedfrom the US approach by explicitly requiring member states to fulfil a norma-tive commitment to ensuring that certain public interest uses can be made oftechnically protected works. Article 6(4) of the EU Copyright Directiveprovides that member states must take ‘appropriate measures’ to ensure thatright holders enable lawful users of copyrighted works to exercise certainexceptions or limitations provided for by national law, even when the worksin question are technically protected.11 Unfortunately, the Directive containssome limits that seemingly undermine this commitment,12 and like the WCT,it provides little guidance about how member states might achieve this goal.National implementations of this Directive thus far have not, in our judgment,adequately facilitated public interest uses of technically protected content norfulfilled the normative commitment to parity in the ability to exercise excep-tions and limitations.13

The resulting imbalance in US and EU member state anti-circumventionrules harms legitimate interests of the public in making fair uses, privilegeduses, and other non-infringing uses of copyrighted works (which collectivelywe deem to be ‘public interest uses’ of copyrighted works).14 We believe that

Public interest uses of technically protected copyrighted works 231

10 Directive 2001/29/EC on the Harmonisation of Certain Aspects of Copyrightand Related Rights in the Information Society, Art. 6, 2001 O.J. (L 167) 10 [hereinafterCopyright Directive]. This Directive is more restrictive than the DMCA in at least twoways. First, it bans all acts of circumvention, not just circumventions of accesscontrols. Compare id. with 17 USC. § 1201(a)(1)(A). Second, it lacks a set of built-inexceptions and limitations such as those in the DMCA. Compare Copyright Directive,supra, Art. 6, with 17 USC. § 1201(c)–(j).

11 Copyright Directive, Art. 6(4). We recognize that other commentators havebeen more skeptical than we are about the will to carry through with this normativecommitment. See e.g., Severine Dusollier (2003), ‘Exceptions and TechnologicalMeasures in the European Copyright Directive of 2001—An Empty Promise’, 34 IIC62; Inst. for Info. Law, Univ. of Amsterdam, ‘Study on the Implementation and Effectin Member States’ Laws of Directive 2001/29/EC on the Harmonisation of CertainAspects of Copyright and Related Rights in the Information Society’, Final Report 73(2007) [hereinafter Copyright Directive Implementation Study].

12 See infra nn. 295–298 and accompanying text.13 See id.; see also infra nn. 334–340 and accompanying text.14 Numerous commentators have noted the imbalance of the DMCA anti-

circumvention rules and their deleterious effects on fair, privileged, and other non-infringing uses of copyrighted works. See, e.g., Timothy K. Armstrong (2006), ‘DigitalRights Management and the Process of Fair Use’, 20 Harv. J. L. & Tech. 49; YochaiBenkler (1999), ‘Free as the Air to Common Use: First Amendment Constraints onEnclosure of the Public Domain’, 74 N.Y.U. L. Rev. 354; Dan L. Burk and Julie E.Cohen (2001), ‘Fair Use Infrastructure for Rights Management Systems’, 15 Harv. J.L. & Tech. 41; Julie E. Cohen (1997), ‘Lochner in Cyberspace: The New Economic

practical judicial and administrative measures can and should be devised toimplement the spirit of the WCT in both the US and EU without reopening thecontentious debates that engulfed the process leading up to enactment of theDMCA and the EU Copyright Directive. To this end, we propose adoption ofa ‘reverse notice and takedown’ procedure to help achieve some of the balancein anti-circumvention rules that the WCT endorsed, but which implementinglegislation has thus far failed to deliver.15 Under this regime, users would beable to give copyright owners notice of their desire to make public interestuses of technically protected copyrighted works, and right holders would havethe responsibility to take down the TPMs or otherwise enable these lawfuluses.

We call this a ‘reverse notice and takedown’ process because, in an inver-sion of the notice and takedown procedure first developed through commonlaw adjudication about ISP liability for wrongful acts of users,16 it is the userwho will be giving notice and the content owner who will have a responsibil-ity to take something down. A reverse notice and takedown regime would


Orthodoxy of Rights Management’, 97 Mich. L. Rev. 462; Jacqueline D. Lipton (2005),‘Solving the Digital Piracy Puzzle: Disaggregating Fair Use from the DMCA’s Anti-Device Provisions’, 19 Harv. J. L. & Tech. 111; Tricia J. Sadd (2001), ‘Fair Use as aDefense Under the Digital Millennium Copyright Act’s Anti-CircumventionProvisions’, 10 Geo. Mason L. Rev. 321; Pamela Samuelson (1999), ‘IntellectualProperty and the Digital Economy: Why the Anti-Circumvention Rules Need to BeRevised’, 14 Berkeley Tech. L.J. 519; Jane C. Ginsburg, ‘The Pros and Cons ofStrengthening Intellectual Property Protection: Technological Protection Measures andSection 1201 of the US Copyright Act’, (Columbia Law Sch. Pub. Law & Legal TheoryWorking Paper Group, Paper No. 07-137, Feb. 1, 2007), available athttp://ssrn.com/abstract=960724.

15 See infra ‘Implications for public interest uses of technically protectedcontent’ at p. 264 and ‘The lock-out technology cases: Chamberlain, Lexmark, andStorageTek,’, at p. 270.

16 Religious Tech. Ctr. (RTC) v Netcom On-Line Commc’n Servs., Inc., 907 F.Supp. 1361 (N.D. Cal. 1995). Netcom opined that Internet access and service providerswere not liable for user infringements unless and until they had received notice aboutthe existence of infringing materials on their sites and failed to investigate and takeinfringing materials down. Id. at 1373–76. (The Netcom decision is discussed infra nn.36–42 and accompanying text.) This notice and takedown approach was later legisla-tively adopted in the US and EU. Three of the four DMCA safe harbors for ISPs, forexample, employ the judicially devised notice and takedown framework set forth inNetcom. See 17 USC. § 512(b)–(d). (The fourth, s. 512(a), creates a safe harbor forcopies made in the course of transitory digital network transmissions for which noticeand takedown is infeasible.) See also Directive 2000/31/EC on Certain Legal Aspectsof Information Society Services, in Particular Electronic Commerce in the InternalMarket, Arts. 12–14, 2000 O.J. (L 178) 1, available at http://eurlex.-europa.eu/LexUriServ/site/en/oj/2000/l_178/l_17820000717en00010016.pdf [hereinafter E-Commerce Directive].

achieve for the anti-circumvention rules a comparable symmetry to thebalance embedded in the ISP safe harbour rules. It would also effectuate thenascent, but not fully realized, legislative intent to permit public interest usesof technically protected digital content, while at the same time protectingcopyright owners against circumvention of TPMs that would facilitate or leadto massive infringements.17

The chapter will demonstrate that a reverse notice and takedown mecha-nism is best understood as a principle capable of numerous implementations.In the US, the most likely way to achieve this goal is through judicial inter-pretation of the anti-circumvention rules through case-by-case adjudication. Itwas, after all, the judicial branch that introduced the fair use doctrine into USlaw and also pioneered the notice and takedown rules to govern ISP liability.In the heated political climate in which the DMCA was enacted, the measuredanalysis developed in Netcom was invaluable in shaping ISP liability rules.Unfortunately, no similarly careful judicial assessment was available in thelate 1990s to guide Congress about how to achieve an appropriate balance inthe anti-circumvention rules. We believe that courts in the US can and shouldbe enlisted in bringing about a balanced approach for dual-use circumventiontechnologies akin to that developed for the dual-use technologies and servicesof ISPs. Recent decisions, moreover, provide a theoretical base upon whichthis case law evolution could occur.

In the EU, by contrast, member states could implement a reverse notice andtakedown regime in the course of fulfilling their obligations under theCopyright Directive, including Art. 6(4), which requires them to ensure thatusers of technically protected works can exercise certain public interest excep-tions. Although it is not possible in either the US or the EU to write anti-circumvention rules on a completely blank slate, there is flexibility in the legalcultures of both entities to implement a reverse notice and takedown procedureto achieve needed balance in anti-circumvention regulations. Nations thathave yet to implement the WCT may find our proposed reverse notice andtakedown regime provides a far more balanced way to comply with the treatythan the approach being promoted by US trade negotiators.18

Part II discusses the legislative history of the DMCA and the checks andbalances embodied in its ISP safe harbour and anti-circumvention rules. Itshows that the notice and takedown regime under section 512 has achieved areasonable balance in the regulation of ISPs for wrongful acts of users, but that


17 This proposal is developed in ‘The reverse notice and takedown framework’at p. 277.

18 See, e.g., Anupam Chander (2006), ‘Exporting DMCA Lock-outs’, 54 Clev.St. L. Rev. 205 (discussing imbalanced anti-circumvention rules that the US hasinsisted on in trade agreements with several nations).

s. 1201 lacks a similar balance. Certain case law interpretations of s. 1201have, moreover, made the DMCA anti-circumvention rules seem even moreimbalanced than its express provisions require.19

‘Setting the stage for a reverse notice and takedown regime’ at p. 255argues that a reverse notice and takedown regime would provide a neededbalance in the US anti-circumvention rules and shows that there is sufficientflexibility in the existing US legal framework for courts to fashion such aregime. ‘Reverse notice and takedown as a mode of implementing Article 6(4)of the EU Copyright Directive’ at p. 284 argues that member states of the EUshould likewise consider adopting a reverse notice and takedown regime as asound way to effectuate the duty that the Copyright Directive imposes on themto ensure that users are able to enjoy copyright exceptions and limitations thathave been granted under national laws, notwithstanding the use of TPMs tocontrol access to and uses of copyrighted works.20

Because the EU imposed this duty, yet deferred to national judgments abouthow to fulfil it, EU member states would seem to have more flexibility toexperiment with different ways to implement a reverse notice and takedownregime than the US presently does. Some of the available options arediscussed later on in this chapter.

CHECKS AND BALANCES IN THE ISP SAFE HARBOURSAND ANTI-CIRCUMVENTION RULES

The WCT was the end product of an international conversation about updat-ing copyright laws for the digital age that began when the ClintonAdministration published its ‘White Paper’ on Intellectual Property and theNational Information Infrastructure in September 1995.21 No checks andbalances were built into that document. Among other things, the WhitePaper opined that Internet service and access providers were and should bestrictly liable for copyright infringement of their users on account of thetemporary copies made in the random access memory of their computers.22


19 See, e.g., Universal City Studios, Inc. v Reimerdes, 111 F. Supp. 2d 294, 324(S.D.N.Y. 2000), aff’d sub nom. Universal City Studios, Inc. v Corley, 273 F.3d 429(2d Cir. 2001).

20 Copyright Directive, Art. 6(4).21 See Working Group on Intellectual Prop. Rights, Info. Infrastructure Task

Force, Intellectual Property and the National Information Infrastructure (1995), [here-inafter White Paper]. Imbalance in the White Paper’s interpretation of digital copyrightissues was widely noted at the time. See, e.g., Pamela Samuelson, ‘The CopyrightGrab’, 4.01 Wired 96 (1996).

22 White Paper, at 114–24. The White Paper analyzed ISP liability based on

ISPs were, in the White Paper’s view, in a far better position to monitor andcontrol user infringements than copyright owners.23 The prospect of liabil-ity would give them strong incentives to ensure that their sites were notused for infringing purposes and to develop technologies to deter infringe-ments.24

The White Paper also recommended legislation to outlaw technologies theprimary purpose or effect of which was to bypass TPMs that copyright ownersused to protect their works.25 Without such protection, the drafters warned,copyright owners would not be willing to make their works available in digi-tal form. The White Paper contemplated no public policy exceptions to or limi-tations on the proposed anti-circumvention rules, a strategy that generatedconsiderable opposition and criticism.26 This section will discuss the differentways that Congress responded to criticisms of the White Paper’s proposed ISPand anti-circumvention liability rules.

ISP Safe Harbour Provisions

Congress had already begun to consider whether ISPs should be liable forwrongful acts of their users, such as libellous postings on bulletin boardservices, at the time the White Paper was published.27 In 1996, as part of atelecommunications regulation reform measure, the telecom industry obtained


temporary copies made in the random access memory of computers as direct infringe-ments of copyright. The White Paper discussed contributory and vicarious liability ina different section. Id. at 109–14.

23 Id. at 117.24 Id. at 117–18.25 Id. at 230–34.26 See, e.g., Jessica Litman (2001), ‘Digital Copyright: Protecting Intellectual

Property on the Internet’ 122–65 (discussing the controversy). See also supra n. 21.27 The ISP immunity provision was first introduced in Congress on 4 August

1995. See 141 Cong. Rec. H8468-69 (daily ed. 4 August 1995). Prior to this, the caselaw on ISP liability for tortious acts of users was mixed. Compare Cubby, Inc. vCompuServe Inc., 776 F. Supp. 135 (S.D.N.Y. 1991) (rejecting a defamation claimagainst CompuServe because it did not monitor user postings) with Stratton Oakmont,Inc. v Prodigy Servs. Co., 1995 WL 323710 (N.Y. Sup. Ct. 1995) (refusing to dismissa lawsuit similar to Cubby because, by monitoring some user postings for harmfulspeech, Prodigy had shown it could monitor for defamation as well). The telecommu-nications industry became concerned that it would routinely be held liable for wrong-ful acts of users insofar as it policed its sites for any reason. The telecom industrylobbied hard for Congressional preemption of decisions such as Stratton Oakmont. TheHouse Conference report makes clear that ‘[o]ne of the specific purposes of [the immu-nity provision] is to overrule . . . decisions which have treated such providers andusers as publishers or speakers of content that is not their own.’ H.R. Rep. No. 104-458,at 94 (1996) (Conf. Rep.).

a broad grant of immunity from liability for user wrongs.28 The industrysuccessfully argued that imposing liability on ISPs for wrongful acts of whichthey were unaware was unfair and unwise. Requiring them to monitor theirsites for wrongful activity would not only interfere with user privacy and free-dom of expression interests, but it would also increase dramatically the cost ofInternet access.

Self-regulation was deemed a more effective way to create incentives forISPs to ensure that their sites were being used for lawful purposes.29 At thecopyright industry’s insistence, Congress carved out an exception to theCommunications Decency Act’s (CDA) immunity provision for intellectualproperty violations.30

Having won a broad grant of immunity in the first round of the fight overISP liability for wrongful acts of users, the telecom industry believed that, byadvancing the same arguments used to gain immunity under the CDA, it couldpersuade Congress to reject the White Paper’s contention that that industryshould be held strictly liable for copyright infringements.31 ISP technologyplatforms were, moreover, ‘dual-use’ technologies, in the sense that they couldbe as easily used for lawful as for unlawful purposes. Under the SupremeCourt’s decision in Sony Corp. of America v Universal City Studios, Inc., ISPplatform technologies seemed to qualify for the safe harbour that Sony carvedout for technologies having substantial non-infringing uses.32

The telecom industry’s chances for averting the strict liability ruleproposed in the White Paper were substantially enhanced by two pre-DMCAdevelopments. One was the Netcom decision, which rejected the WhitePaper’s strict liability theory against ISPs.33 A second was an internationalrepudiation of a similar proposed strict liability rule for Internet intermedi-aries that the US had initially supported at the diplomatic conference that


28 Telecommunications Act of 1996, Pub. L. No. 104–104, 110 Stat. 56. Title Vof this Act was the Communications Decency Act. The immunity provision is nowcodified at 47 USC. § 230(c)(1) (‘No provider or user of an interactive computerservice shall be treated as the publisher or speaker of any information provided byanother information provider.’).

29 The rationale for this grant of immunity is discussed in Zeran v AmericaOnline, 129 F.3d 327 (4th Cir. 1997).

30 47 USC. § 230(e)(2). The Ninth Circuit has recently ruled that this limitationon CDA immunity applies only to federal intellectual property laws. See Perfect 10,Inc. v. CCBill LLC, 481 F.3d 751, 768 (9th Cir. 2007) (applying CDA immunity provi-sion to state right of publicity claims).

31 See supra text accompanying n. 29 for the rationale for the CDA immunity.32 Sony Corp. of Am. v Universal City Studios, 464 US 417, 442 (1984).33 Religious Tech. Ctr. (RTC) v Netcom On-Line Commc’n Servs., Inc., 907 F.

Supp. 1361, 1370 (N.D. Cal. 1995).

produced the WCT.34 An Agreed Statement on the treaty further clarified that‘mere provision of physical facilities for enabling or making a communicationdoes not in itself amount to communication’ under the treaty.35 ISPs couldaccordingly point to the international consensus against a strict liability rulewhen arguing for a more balanced approach before Congress.

The Netcom decision was a pivotal development in the legislative dramathat spawned the DMCA safe harbours.36 In response to the copyright owner’sdirect infringement claim against Netcom, the alleged infringer’s Internetaccess provider, Judge Whyte identified the question in the case as ‘whetherpossessors of computers are liable for incidental copies automatically made ontheir computers using their software as part of a process initiated by a thirdparty.’37 Judge Whyte decided that RTC’s direct infringement theory was anunreasonable interpretation of copyright law because it would logically lead toimposing liability on owners of ‘every single Usenet server in the worldwidelink of computers transmitting Erlich’s message to every other computer.’38

Before an Internet access provider could become directly liable, there neededto be proof of ‘some element of volition or causation’, proof ‘which is lackingwhere a defendant’s system is merely used to create a copy for a third party’.39


34 The Clinton Administration had supported a draft treaty provision underwhich ISPs would have been strictly liable for temporary copies of infringing materi-als passing through their computers. See Samuelson, supra n. 4, at 383–92 (discussingdebate over ISP liability at the WIPO diplomatic conference).

35 Agreed Statements, statement concerning Art. 8.36 RTC, 907 F. Supp. at 1364–66. Litigation ensued after Dennis Erlich, a former

minister of the Scientology religion turned vocal critic, posted portions of the writingsof L. Ron Hubbard in the alt.religion.scientology Usenet newsgroup. RTC, owner ofthe relevant copyrights, sued Erlich, Thomas Klemesrud (the operator of a bulletinboard service (BBS) on which Erlich had made the postings), and Netcom (the Internetaccess provider for Klemesrud’s BBS), for copyright infringement. Id. at 1366.

37 Id. at 1368. In support of its direct infringement claim, RTC relied upon theWhite Paper; the Ninth Circuit’s decision in MAI Systems Corp. v Peak Computer, Inc.,991 F.2d 511 (9th Cir. 1993), which held that temporary copies of copyrighted worksmade in the random access memory of computers were infringing reproductions of theworks unless authorized by the copyright owner or the law, id. at 518; and Playboy vFrena, 839 F. Supp. 1552 (M.D. Fla. 1993), which held the operator of a BBS directlyliable for infringing copies of Playboy bunny pictures that users had uploaded to anddownloaded from the BBS. The White Paper had also relied upon MAI in support of itsview that making temporary as well as permanent copies of works in digital form werecopyright-significant acts and upon Frena in support of its view that ISPs were directlyliable for user infringements. See White Paper, at 64–69, 120.

38 RTC, 907 F. Supp. at 1369.39 Id. at 1370. Judge Whyte also granted Netcom’s motion for summary judg-

ment on RTC’s vicarious liability claim. Although the judge was skeptical of Netcom’sclaim that it lacked the ability to supervise and control users’ postings, the vicarious

Although Judge Whyte also agreed with Netcom that it should not be heldcontributorily liable for Erlich’s infringement before receiving notice aboutthis risk, he took issue with Netcom’s assertion that RTC’s notice of Erlich’sinfringement was ‘too equivocal given the difficulty in assessing whetherregistrations are valid and whether a use is fair.’40 While ‘a mere unsupportedallegation of infringement by a copyright owner may not automatically put adefendant on notice of infringing activity,’ Judge Whyte declared, ‘Netcom’sposition that liability must be unequivocal is unsupportable.’41 Upon receiptof a proper notice, Judge Whyte thought that Netcom should have a duty toinvestigate the claim of infringement and to take the material down if the claimwas valid. Failure to do so amounted to a substantial contribution to userinfringement that, if proven, would justify contributory infringement liabil-ity.42

Two of the DMCA safe harbours are codifications of the Netcom ruling: s.512(a) exempts service providers from liability for incidental copies made inthe course of network transmission of digital content on behalf of users;43 ands. 512(c) exempts copies made in storing information for users except whenproviders have received proper notice of infringement from the copyrightowner and failed to investigate the charges and remove infringing materials.44

Congress also created safe harbours for caching of digital content to enablefaster service to users and for information locating tools (for example, searchengines) that might connect users to infringing materials.45 The informationstorage, caching, and information location tool safe harbours have notice andtakedown requirements akin to those articulated in Netcom.46


claim was unsustainable because Netcom had not received any direct financial benefitfrom user infringements. Id. at 1375–77.

40 Id. at 1373. ‘To require proof of valid registration would be impractical andwould perhaps take too long to verify, making it impossible for a copyright holder toprotect his or her works in some cases. . . .’ Id.

41 Id. at 1374.42 Id. at 1374–75. There being a triable issue of fact on the adequacy of RTC’s

notice to Netcom and the reasonableness of Netcom’s response, the latter’s motion forsummary judgment on the contributory infringement claim failed. Id. The White Paperhad not considered a notice and takedown regime as a way to balance competing inter-ests in ISP liability cases.

43 17 USC. § 512(a).44 Id. at § 512(c).45 Id. at § 512(b) (caching safe harbour), § 512(d) (information location tool

safe harbour). As mentioned above, the EU found notice and takedown to be a balancedapproach to ISP liability in its E-Commerce Directive, which, like the DMCA, providesa safe harbour for transmission, caching, and information storage. It has no counterpart,however, to s. 512(d). E-Commerce Directive, supra n. 16, Arts. 12–14.

46 17 USC. §§ 512(b)(2)(E)(i), (c)(1)(A), (d)(1)(A).

The DMCA safe harbours represented a major victory for telecom andInternet industry groups, given that powerful copyright industry groups hadwanted service providers held strictly liable for infringing acts of users.Other legislative concessions to ISPs included: a specification of whatconstitutes adequate notice from copyright owners before the duty to inves-tigate arises;47 a counter-notice regime so that users can ask to restore infor-mation initially taken down in response to a complaint of infringement;48 animmunity for taking information down based on a good faith belief that suchaction was proper;49 limitations on injunctive relief;50 and a clarification thatservice providers were not obliged to monitor their sites for infringing mate-rials.51

Copyright industry groups obtained some concessions as well. ISPs couldrely on the safe harbours only if they had adopted and reasonably implementedpolicies to terminate repeat infringers, and if they accommodated standardtechnical measures that might be developed in the future for the protection ofdigital copyrighted works.52 ISPs were obliged to publicly designate an agentto whom notices of infringement could be sent.53 The DMCA also authorizedcopyright owners to seek subpoenas to require service providers to disclosenames and other identifying information about ISP subscribers whom copy-right owners alleged were infringers.54


47 Id. at § 512(c)(3). The Ninth Circuit gave this requirement some teeth in arecent secondary liability case:

In order to substantially comply with sec. 512(c)(3)’s requirements, a notificationmust do more than identify infringing files. The DMCA requires a complainant todeclare, under penalty of perjury . . . that he has a good faith belief that the use isinfringing.. . . Permitting a copyright holder to cobble together adequate noticefrom separately defective notices . . . unduly burdens service providers.

Perfect 10, Inc. v CCBill LLC, 481 F.3d 751, 761–62 (9th Cir. 2007).48 17 USC. § 512 (g)(2)–(3).49 Id. at § 512(g)(1).50 Id. at § 512(j)(1)–(2).51 Id. at § 512(m).52 Id. at § 512(i). See Perfect 10, Inc., 481 F.3d at 758–64 (discussing the

reasonable implementation requirement).53 17 USC. § 512(c)(2).54 Id. at § 512(h). But see Recording Indus. Ass’n of Am. v Verizon Internet

Servs., Inc., 351 F.3d 1229 (D.C. Cir. 2003) (holding RIAA not authorized to obtainsubpoena identifying information as to file sharers whose communications Verizontransmitted; s. 512(h) allows subpoenas as to s. 512(c) storage of information, not as tos. 512(a) transmissions of information).

The DMCA safe harbours have generally been efficacious in run-of-the-mill copyright infringement cases involving users and their ISPs.55 Copyrightowners have incentives to monitor Internet sites for infringing materials and toprovide appropriately detailed information to ISPs so that the infringing mate-rial can be taken down. Copyright owners are deterred from sending false oroverreaching notices of infringement not only by provisions of the DMCA thatpenalize wrongful notices,56 but also by the prospect of ‘bad’ publicity andjudicial sanctions if they send improper or overreaching notices.57 ISPs haveincentives to cooperate with copyright owners in the notice and takedownprocess and to terminate repeat infringers lest they forfeit the safe harboursprovided by the DMCA.

While there is some empirical evidence that ISPs are perhaps quicker thanthey should be to take materials down upon receipt of notice and that thecounter-notice procedures are too rarely invoked,58 ISPs and copyright ownershave generally adapted to conducting businesses within the framework of thenotice and takedown regime of the DMCA safe harbours.59 Viacom’s pendingcopyright infringement lawsuit against YouTube will test how secure theDMCA safe harbours really are,60 but it will not be surprising if the court tellsViacom that it should take its complaint to Congress, as Viacom is essentiallytrying to achieve through litigation what the copyright industry was unable toobtain from Congress in 1998.61 Leaving aside the Viacom lawsuit, the past


55 See, e.g., Christian C.M. Beams (1999), ‘Note: The Copyright DilemmaInvolving Online Service Providers: Problem Solved . . . For Now’, 51 Fed. Comm.L.J. 823, 846; Heidi Pearlman Salow (2001), ‘Liability Immunity for Internet ServiceProviders – How Is It Working?’, 6 J. Tech. L. & Pol’y 31, 49–50.

56 17 USC. § 512(f). This provision has some teeth, as is illustrated by OnlinePolicy Group v Diebold, Inc., 337 F. Supp. 2d 1195 (N.D. Cal. 2004) (sanctioning anelectronic voting technology firm for knowing misrepresentations when giving noticeto an ISP to take down allegedly infringing materials).

57 See e.g., Free Speech Battle Over Online Parody of ‘Colbert Report,’http://www.eff.org/news/archives/2007_03.php#005176 (Mar. 22, 2007) (challengingViacom notice and takedown demand as to parody available on YouTube).

58 See e.g., Jennifer Urban and Laura Quilter (2006), ‘Efficient Process or‘Chilling Effects’? Takedown Notices Under Section 512 of the Digital MillenniumCopyright Act’, 22 Santa Clara Computer & High Tech. L.J. 621. For examples ofnotice and takedown letters that have had chilling effects on users, see http://chilling-effects.org/copyright/.

59 See, e.g., Kevin M. Lemley (2003), ‘Comment: Protecting Consumers FromThemselves: Alleviating the Market Inequalities Created by Online CopyrightInfringement in the Entertainment Industry’, 13 Alb. L.J. Sci. & Tech. 613, 620.

60 See Complaint, Viacom Int’l, Inc. v YouTube, Inc., No. 07 Civ. 2103 (S.D.N.Y.12 March 2007).

61 See, e.g., CoStar Group, Inc. v LoopNet, Inc., 373 F.3d 544 (4th. Cir. 2004)

decade of experience with the DMCA notice and takedown regime suggeststhat a relatively balanced and workable solution to this particular dual-usetechnology problem has been found.62

Anti-circumvention Provisions

In addition to endorsing a strict liability rule against ISPs, the White Paperanticipated that many copyright owners would find it desirable to use techni-cal protection measures for digital media products or services intended fordistribution via global digital networks; yet, it also recognized that clever tech-nologists could build tools to bypass these TPMs, which would thereby renderdigital works vulnerable to infringements.63 To offer greater security to tech-nically protected content, the White Paper recommended enactment of a banon technologies, ‘the primary purpose or effect of which is to avoid, bypass,remove, deactivate, or otherwise circumvent’ technical measures used bycopyright owners to protect their works.64

The White Paper offered very little policy analysis in support of this ban.65


(rejecting copyright owner arguments for intermediary liability as having been resolvedby DMCA safe harbors).

62 See, e.g., Beams, supra n. 55, at 841; Tim Wu, ‘Does YouTube Really HaveLegal Problems?’, Slate.com, 26 October 2006, http://www.slate.com/id/2152264/(arguing that ‘the content industry actually likes section 512 more than anyone willadmit’). See also Michael L. Rustad & Thomas H. Koenig (2005), ‘RebootingCybertort Law’, 80 Wash. L. Rev. 335, 397 (praising the balance of the notice and take-down rules).

63 White Paper, at 230.64 The White Paper’s proposal was:

No person shall import, manufacture or distribute any device, product, or compo-nent incorporated into a device or product, or to offer or perform a service, theprimary purpose or effect of which is to avoid, bypass, remove, deactivate, or other-wise circumvent, without authority of the copyright owner or the law, any process,treatment, mechanism, or system which prevents or inhibits the exercise of any ofthe exclusive rights under section 106.

Id., Appendix 1 at 6.65 The White Paper did state:

The Working Group finds that prohibition of devices, products, components, andservices that defeat technological methods of preventing unauthorized use is in thepublic interest and furthers the Constitutional purpose of copyright laws.Consumers of copyrighted works pay for the acts of infringers; copyright ownershave suggested that the price of legitimate copies of copyrighted works may behigher due to infringement losses suffered by copyright owners. The public will also

It dismissed as misguided expressions of concern about the effects of anti-circumvention rules on the public domain and on fair and other privileged usesof copyrighted works.66 Clinton Administration officials also proposed that avirtually identical provision should be included in the WCT.67

The Sony Safe Harbour was the pre-DMCA default rule for dual-usetechnologiesThe radical nature of the White Paper’s proposed anti-circumvention rule canbest be appreciated by contrasting it with the safe harbour for technologieswith substantial non-infringing uses set forth in Sony Corp. of America vUniversal City Studios, Inc.68 Sony was the first case to consider whethercopyright owners could hold technology developers indirectly liable for userinfringements on the ground that the primary purpose or effect of the chal-lenged technologies was to facilitate unauthorized copying of copyrightedworks.69

Universal sued Sony for contributory infringement in 1976, shortly afterSony introduced the Betamax video tape recorder (VTR) to the market, claim-ing that Sony knew that the primary use of its Betamax machines would be tomake unauthorized, and hence infringing, copies of copyrighted works, suchas movies shown on broadcast television.70 Indeed, Sony’s advertisementsencouraged the public to purchase its VTRs in order to copy favouriteprograms.71 In 1981, the Ninth Circuit Court of Appeals ruled in Universal’sfavour, on the grounds that making copies of copyrighted televisionprogrammes, even for time-shifting purposes, was direct infringement, andthat Sony had knowingly contributed to that infringement because the primary


have access to more copyrighted works if they are not vulnerable to the defeat ofcopy protection systems.

Id. at 230.66 Id. at 231–32.67 See Samuelson, supra n. 4, at 409–15 (discussing proposed WIPO treaty anti-

circumvention provision).68 Sony Corp. of Am. v Universal City Studios, Inc., 464 US 417 (1984). The

White Paper did not mention that its anti-circumvention rule would partially overturnthe Sony safe harbor for technologies with substantial non-infringing uses. The WhitePaper mischaracterized Sony as a case in which the absence of a market for home-taping had led the Court to conclude that time-shift copying of television programs wasfair use. White Paper, at 79.

69 For a well told history of the lawsuit, see generally James Lardner, ‘FastForward: A Machine and the Commotion It Caused’ (rev. ed. 2002).

70 Sony, 464 US at 459.71 Id.

use of Betamax machines was to make such copies.72 In 1984, the SupremeCourt reversed, holding that time-shift copying of TV programmes was fair useand that Sony was not liable for contributory infringement on account of thesubstantial non-infringing uses to which the Betamax machines could be put.73

Justice Stevens, writing for the Court in Sony, observed that the only theoryon which Sony could be held liable was ‘that [it has sold] equipment withconstructive knowledge that its customers may use that equipment to makeunauthorized copies of copyrighted material.’74 There was, however, ‘noprecedent for imposition of [secondary] liability on such a theory,’75 nor anybasis in the copyright statute.76 Holding Sony liable on this theory was unwar-ranted, moreover, because of the significant effects it would have on otherparties, including copyright owners who approved of time-shift copying oftheir programmes by Betamax users, members of the public who wantedaccess to such technologies to make authorized and fair uses of them, and ofcourse, Sony and other technology developers who wanted to make and sellthese technologies.77 ‘When a charge of contributory infringement is predi-cated entirely on the sale of an article in commerce that is used by thepurchaser to infringe [an intellectual property right], the public interest inaccess to that article is necessarily implicated.’78

Sony recognized that Congress had resolved a similar tension in patent lawby imposing contributory liability on technology developers only when theymade and sold devices that had been ‘especially made or especially adapted


72 Universal City Studios, Inc. v Sony Corp. of Am., 659 F.2d 963, 971-72 (9thCir. 1981).

73 Sony, 464 US at 447–56.74 Id. at 439.75 Id.76 Justice Stevens pointed out that US copyright law ‘does not expressly render

anyone liable for infringement committed by another.’ Id. at 434. Universal argued that‘Kalem [Co. v Harper Bros., 222 US 55 (1911)] stands for the proposition that supply-ing the “means” to accomplish an infringing activity and encouraging that activitythrough advertisement are sufficient to establish liability for copyright infringement.’Sony, 464 US at 436. This was, Justice Stevens opined, a ‘gross generalization thatcannot withstand scrutiny.’ Id.

77 Id. at 434–42.78 Id. at 440. This statement was particularly significant because by the time the

Court heard oral argument in Sony for the second time, 9.5 million American house-holds had Betamax machines; under Universal’s theory, virtually every Betamax userwas a copyright infringer, and Sony’s potential liability was vast. Counsel for Sony ledoff his oral argument with this fact. See Jessica Litman (2005), ‘The Sony Paradox’, 55Case W. Res. L. Rev. 917, 940. The potential for statutory damages for which Sonyand/or owners of Betamax machines might be liable if Universal’s theory was acceptedwas staggeringly large.

for use in an infringement of . . . a patent.’79 Congress had created a statutorysafe harbour from contributory liability for dual-use technologies, that is, for‘staple articles of commerce,’ which applies to technologies ‘suitable forsubstantial non-infringing use.’80 This safe harbour recognized a legitimatepublic interest in having the ability to access and enjoy staple articles for theirnon-infringing purposes.

Invoking an ‘historic kinship’ between the copyright and patent laws,81 theCourt decided such a safe harbour was appropriate for copyright law as wellas for patent law. ‘The sale of copying equipment, like the sale of other arti-cles of commerce, does not constitute contributory infringement,’ Sonyopined, ‘if the product is widely used for legitimate unobjectionablepurposes.’82 Indeed, ‘it need merely be capable of substantial non-infringinguses.’83 Because the Betamax had substantial non-infringing uses for time-shift copying of television programmes, the Court ruled that Sony could not beheld secondarily liable for any infringing acts of users of these machines.84

In the twenty-some years since the Sony decision, information technologydevelopers and the copyright industries have flourished.85 The Sony safeharbour has been an important contributor to the success of both industries.Consumer electronics industry representatives speak of the Sony safe harbouras the ‘Magna Carta’ for their industry.86 Universal and other motion picture


79 35 USC. § 271(c).80 Id. For a highly informative discussion of the case law on the staple article of

commerce rule, see Donald S. Chisum, Chisum on Patents § 17.03 (2004).81 Sony, 464 US at 439. For an argument that the Court was justified in borrow-

ing this rule from patent law, see, for example, Brief of Amici Curiae of SixtyIntellectual Property and Technology Law Professors and US-ACM Public PolicyCommittee, to the US Supreme Court in MGM v Grokster, 20 Berkeley Tech. L.J. 535(2005) [hereinafter IP Professor Amicus Brief]. But see Peter S. Menell and DavidNimmer (2007), ‘Unwinding Sony’, 95 Cal. L. Rev. 941, 985 (questioning the historickinship justification).

82 Sony, 464 US at 442.83 Id.84 Id. at 456.85 See e.g., Pamela Samuelson (2006), ‘The Generativity of Sony v. Universal:

The Intellectual Property Legacy of Justice Stevens’, 74 Fordham L. Rev. 1831,1850–51 (discussing the legacy of Sony).

86 Litman, supra n. 78, at 951. There is considerable support for the Sony safeharbour among academics as well as among technology developers. See e.g., IPProfessor Amicus Brief, supra n. 81; Brief of Intel Corp. as Amicus Curiae SupportingAffirmance, Metro-Goldwyn-Mayer Studios, Inc. v Grokster, Ltd., 545 US 913 (2005)(No. 04-480), available at http://www.eff.org/IP/P2P/MGM_v_Grokster/20050301_intel.pdf [hereinafter Intel Amicus Brief]. However, there are also some crit-ics. See e.g., Menell and Nimmer, supra n. 81; Douglas Lichtman and William Landes(2003), ‘Indirect Liability for Copyright Infringement: An Economic Perspective’, 16Harv. J. L. & Tech. 395.

producers greatly benefited from the installed base of Betamax and otherVTRs, which created opportunities for a wholly new lucrative market forcopyrighted motion pictures, such as the sale of video cassettes of movies thatcould be played in VTR machines.87 Many other new technologies, includingnotably the iPod, have similarly allowed both information technology andcopyright industries to achieve mutual success.88

Although Congress has been persuaded on two occasions to deviate fromthe Sony safe harbour in very narrowly drawn circumstances,89 it has rejectedother legislative proposals aimed at giving copyright owners greater controlover dual-use technologies.90 Courts have also denied relief to some whosought to expand technology developer liability.91 Yet, when presented withtechnologies lacking in substantial non-infringing uses, courts followed Sonyand imposed liability for infringements thereby enabled.92

The White Paper had sought to establish a new rule for technology devel-oper liability with respect to so-called circumvention technologies based onthe ‘primary use’ of the technology.93 This approach resembled the technologydeveloper liability rule that the Supreme Court rejected in Sony as too unbal-anced. Soon after enactment of the DMCA, the entertainment industrycommenced litigation against peer-to-peer (‘P2P’) file-sharing software devel-oper Napster with the aim of overturning the Sony safe harbour for technolo-gies with substantial non-infringing uses.94 In cases against P2P file-sharing


87 Lardner, supra n. 69, at 297–313.88 See e.g., Intel Amicus Brief, supra n. 86.89 See 17 USC. § 1002 (prohibiting manufacture and sale of digital audio

recording technologies unless they incorporate serial copy management technologies);47 USC. § 605(e)(4) (outlawing development and distribution of satellite cabledecoder boxes). These narrow exceptions to the Sony safe harbour are discussed inSamuelson, supra n. 85, at 1858–62.

90 See e.g., Nicholas E. Sciorra (1993), ‘Note, Self-Help and ContributoryInfringement: The Law and Legal Thought Behind a Little Black Box’, 11 CardozoArts & Ent. L.J. 905.

91 In Vault Corp. v Quaid Software, Ltd., 847 F.2d 255 (5th Cir. 1988), forinstance, the maker of the Prolok copy-protection software sued Quaid, the maker ofRamkey software that bypassed Prolok, claiming Quaid was a secondary copyrightinfringer because the primary use of its software was likely to be making infringingcopies of Prolok-protected software. The court invoked the Sony safe harbour as a basisfor denying Vault’s claim because Ramkey was a dual-use technology that enabledpurchasers of software products to make lawful backup copies. Id. at 262.

92 See e.g., A&M Records, Inc. v Abdallah, 948 F. Supp. 1449 (C.D. Cal. 1996)(imposing secondary liability because alleged non-infringing uses were insubstantial).

93 See supra n. 25 and accompanying text.94 See A&M Records, Inc. v Napster, Inc., 114 F. Supp. 2d 896 (N.D. Cal. 2000),

aff’d in part, rev’d in part, 239 F.3d 1004 (9th Cir. 2001), discussed infra ‘The dissem-ination technology cases: Napster, Aimster and Grokster’ at p. 255.

technology developers, the entertainment industry once again urged the courtsto adopt a ‘primary use’ theory of technology developer liability for userinfringements.95 Part III will discuss why the latter effort was unsuccessful,but for now, it suffices to say that the White Paper proposal for regulating tech-nologies based on their primary purpose or use was a radical departure fromthe Sony safe harbour default rule in place since 1984.96

TECHNOLOGY DEVELOPER RESPONSES TO THE WHITEPAPER’S ANTI-CIRCUMVENTION RULE

Information technology developers raised numerous concerns about the WhitePaper’s proposed anti-circumvention rule in addition to objecting to its incom-patibility with the Sony safe harbour for technologies with substantial non-infringing uses.97 For one thing, the proposed provision was vague about whatkinds of ‘processes’ and ‘treatments’ it was designed to protect. For another,its willingness to penalize technology developers based on ‘primary effect’meant that developers risked liability for what users did with the technology,rather than for what the technology had been designed to do. The proposedrule also lacked exceptions for legitimate acts, such as building tools to bypassTPMs for law enforcement, national security, or computer security researchpurposes. It could, moreover, be interpreted as outlawing the development ofreverse engineering technologies to enable interoperability among computerprograms.


95 See e.g., Petition for a Writ of Certiorari at 15-20, Metro-Goldwyn-MayerStudios Inc. v Grokster, Ltd., 545 US 913 (2005) (No. 04-480) (interpreting Sony as a‘primary use’ case), available at http://www.eff.org/IP/P2P/MGM_v_Grokster/20041008_Grokster_final_petition.pdf.

96 Although the White Paper did not acknowledge that its proposal would haveany impact on the Sony safe harbor, Marybeth Peters, the Register of Copyrights, didso in the course of the legislative debate that led up to the DMCA. See WIPO CopyrightTreaties Implementation Act and On-Line Copyright Liability Limitation Act: Hearingon H.R. 2281 and H.R. 2180, Before the Subcomm. on Courts and Intellectual Propertyof the House Comm. on the Judiciary, 105th Cong. (1997) (statement of MarybethPeters, the Register of Copyrights), available at http://www.copyright.gov/docs/2180_stat.html.

97 The technology industry objections to the White Paper proposed anti-circum-vention rule are discussed at length in Samuelson, supra n. 14, at 531–534, 546–557.Some in the technology industry, including the Business Software Alliance and itsmembers, ultimately supported the DMCA anti-circuvmention rules because they weremore narrowly tailored than the White Paper proposal and because these developerssometimes use TPMs to control access to their works and did not want others to buildtools to circumvent them.

The greatest concern of technology developers, however, was that theprovision might be construed as imposing a duty on them to detect and enforceany TPM that copyright owners might use to protect their works in digitalform. The most vigorous technology industry lobbying about anti-circumven-tion rules concentrated on getting statutory clarification that they had no oblig-ation to design technologies to respond to copyright-protective TPMs.

The technology industry’s opposition to the proposed anti-circumventionrule contributed to a stall in the initial legislative efforts in 1995 and 1996 toenact the White Paper’s recommendation.98 Another setback for copyrightindustry groups occurred in December 1996 when opposition to a WhitePaper-like ban on circumvention technologies caused it to be dropped from thefinal version of the WCT.99 Many delegations at the WIPO diplomatic confer-ence were concerned that the proposed anti-circumvention rule would chilldevelopment of dual use technologies and impede fair and other non-infring-ing uses of copyrighted works and public domain materials.100 To avert theseundesirable effects, the treaty required only that contracting parties provide‘adequate protection’ and ‘effective remedies’ against circumvention ofTPMs,101 which seemingly left the mode and extent of implementation of thisnorm to national discretion.

Congressmen Tom Campbell and Rick Boucher proposed to implement thistreaty obligation in the U.S. with a minimalist anti-circumvention rule aimedat outlawing circumvention of a TPM for purposes of facilitating or engagingin infringing activities.102 This bill was unacceptable to copyright industrygroups, who favored adoption of a broad ban on circumvention technologies,akin to the proposal that had been rejected at WIPO, to serve as a standard forinternational implementation of the WIPO treaty’s anti-circumventionnorm.103

The Clinton Administration’s post-treaty anti-circumvention proposalresponded to technology industry concerns in several ways: by becomingmore precise about the technical measures the rule was designed to protect;104

by defining circumvention;105 and by outlawing only technologies that were


98 Id. at 523.99 See Samuelson, supra n. 4, at 409–416 (discussing opposition to the proposed

WIPO treaty anti-circumvention provision).100 Id.101 WCT, supra n. 1, art. 11.102 See H.R. 3048, 105th Cong., § 8 (1997).103 See, e.g., Chander, supra n. 18, at 206–07 (discussing stronger than DMCA

anti-circumvention rules being negotiated by the U.S. in free trade agreements withother nations).

104 17 U.S.C. § 1201(a)(3).105 Id.

‘primarily designed or produced’ to circumvent TPMs, that had only limiteduses other than for circumvention, or that had been marketed as circumventiontools.106 It also contained an exception for national security and law enforce-ment activities.107 Further lobbying led to the creation of exceptions forencryption research, computer security testing,108 and reverse engineering toachieve interoperability.109 The technology industry also obtained the ‘nomandate’ clause that had been its top priority. Section 1201(c)(3) provides thatthe law does not ‘require that the design of, or design and selection of partsand components for, a consumer electronics, telecommunications, or comput-ing product provide for a response to any particular technological protectionmeasure.’110

Given how hard the copyright industries fought against inclusion of anyexceptions to § 1201 – beyond that for law enforcement and national securityactivities – especially the ‘no mandate’ rule, it is notable that technology indus-try objections led to substantial changes in the circumvention technology rules.

Still, it was a major victory for the entertainment industry that the DMCAanti-circumvention rules premised technology developer liability on a ‘primar-ily designed or produced’ standard.111 Copyright industry representatives werepleased with the DMCA also because, on its face, § 1201 does not appear torequire any proof that the availability of a circumvention tool enabled copy-right infringement or even created a grave risk of infringement.112 The excep-tions are, moreover, complex and ambiguous enough to be susceptible todismissive interpretations.113


106 Id. at §§ 1201(a)(2), 1201(b)(1).107 Id. at § 1201(e).108 Id. at §§ 1201(g), 1201(j).109 Id. at § 1201(f).110 Id. at § 1201(c)(3).111 Id. at §§ 1201(a)(2)(A), 1201(b)(1)(A).112 For a discussion of numerous examples of the ill effects arising from the over-

breadth of the DMCA anti-circumvention rules, see Electronic Frontier Foundation,Unintended Consequences: Seven Years under the DMCA (as updated Apr. 2006),available at http://www.eff.org/IP/DMCA/DMCA_unintended_v4.pdf [hereinafterUnintended Consequences].

113 See, e.g., National Research Council, The Digital Dilemma: IntellectualProperty in the Information Age 171–76 (2001) [hereinafter Digital Dilemma] (raisingobjections to the complexity and narrowness of the DMCA encryption research excep-tion). Under the Reimerdes decision, a journal publisher could arguably be held liablefor violating the DMCA anti-circumvention laws even if the author of an encryptionresearch article it planned to publish qualified for the DMCA exception because thepublisher was not itself an encryption researcher. Reimerdes, 111 F. Supp. 2d at 320.See Pamela Samuelson, ‘Anti-Circumvention Rules: Threat to Science’, 293 Science2028 (2001).

Regulating acts of circumvention and public interest uses of technicallyprotected worksThe most troubling part of the legislative history of the DMCA anti-circum-vention rules was the manner in which Congress dealt with the threat thatTPMs posed for the public’s ability to engage in fair and other non-infringinguses of copyrighted works protected by TPMs. As we shall see at p. 284, theEU implemented the WCT anti-circumvention norm by making a normative(if incomplete) commitment to ensuring that copyright exceptions and limita-tions on the scope of exclusive rights must be made as available when copy-righted works are protected by TPMs as when they are not.114 No similarcommitment is apparent in the DMCA rules, although there is ample, if some-what equivocal, evidence that Congress had tried to assure itself through vari-ous measures that it was preserving opportunities for fair and other privilegeduses of technically protected digital content.115

The initial threat that the White Paper posed to fair and other public inter-est uses of technically protected copyrighted works was somewhat indirect.The White Paper had not attempted to regulate the act of circumvention, butits proposal to ban circumvention technologies affected public interest usesinsofar as circumvention tools were necessary to engage in such uses ofcontent wrapped in TPMs.116 From the standpoint of copyright owners,however, circumvention technologies that enabled fair or other public interestuses of technically protected works were dangerous because they were toolikely to enable infringements. A broad ban on circumvention technologieswas, they argued, necessary to protect against massive infringements.

It was not until 1997 that the Clinton Administration proposed a ban on theact of circumventing TPMs used by copyright owners to protect theirworks.117 The bill distinguished between two types of TPMs: those used tocontrol access to copyrighted works and those used to protect ‘a right of acopyright owner’ in a work protected by copyright law.118 Its sponsors did not


114 See infra p. 281 (discussing limits that have hampered the effectiveness ofArticle 6(4) in achieving this objective).

115 See e.g., 17 USC. § 1201(c)(1), discussed infra nn. 124–125 and 251–257and accompanying text.

116 See e.g., Julie E. Cohen (1998), ‘Copyright and the Jurisprudence of Self-Help’, 13 Berkeley Tech. L.J. 1089. Yet, perhaps building a circumvention tool forpublic interest purposes could be defended as authorized by the law, even if not by thecopyright owner. Id. at 1142 n.200. If so, it might have been outside the White Paper’santi-circumvention ban, which recognized both sources of authority as relevant to thescope of the ban.

117 See H.R. 2281, 105th Cong. (1997).118 The distinction between the two types of TPMs is evident in the bifurcation

of the anti-tool rules. See id., § 3. The DMCA, as enacted, has retained this distinction.See 17 USC. § 1201(a)(2), (b)(1).

explain why the bill distinguished between these two types of TPMs, nor whyit proposed totally banning circumvention of access controls, but not of otherTPMs.

A coalition of organizations, including libraries, educational institutions,and other non-profit organizations raised concerns about the direct impact thatsuch a ban would have on fair and other non-infringing uses of copyrightedworks in digital form, on access to public domain materials, and on userprivacy interests.119 These concerns did not, however, arouse Congressionalinterest as much as concerns about overbroad ISP liability. This relative indif-ference may be explained in part perhaps because the lobbying clout of thesenonprofits was minute in comparison with the heft of the copyright, telecom,and technology industries that lobbied about ISP liability. Furthermore,deployment of TPMs to protect copyrighted works was in its early stages, soconcerns about impediments to fair and other privileged uses may haveseemed speculative.120

Yet, if one knows where to look, there is considerable evidence ofCongressional concern about enabling public interest uses of technicallyprotected content. By regulating circumvention of access controls, but not ofrights controls,121 Congress decided, albeit implicitly, that circumvention forfair use and other public interest purposes should remain lawful. Congress alsocreated three special public interest exceptions, including one for libraries,archives, and educational institutions to bypass TPMs to make a good faitheffort to decide whether to buy the content protected by the TPM if circum-vention was necessary to achieve this objective;122 one that aims to protectuser privacy interests implicated when content is protected by TPM; and onethat buttresses parental control over minors.123


119 See WIPO Copyright Treaties Implementation Act and On-Line CopyrightLiability Limitation Act: Hearing on H.R. 2281 and H.R. 2180, Before the Subcomm.on Courts and Intellectual Property of the House Comm. on the Judiciary, 105th Cong.(1997) (testimony of Robert Oakley; testimony of M.R.C. Greenwood).

120 The important role of the House Commerce Committee in inserting somebalance in the anti-circumvention rules is related in Samuelson, supra n. 14, at 541–43.

121 17 USC. § 1201(a)(1)(A). See Ginsburg, supra n. 14, at 6 (noting that section1201 ‘does not prohibit the act of circumventing a rights control’). Ginsburg believesthat the decision not to regulate circumvention of rights controls was intended to leaveroom for fair uses of technically protected works. Id. at 10.

122 17 USC. § 1201(d).123 Id. at § 1201(h), (i). These provisions are, however, a puzzlingly narrow

response to concerns expressed about the anti-circumvention ban. See e.g., Samuelson,supra n. 14, at 537–53 (explaining the undue narrowness of s. 1201’s exceptions);David Nimmer (1999), ‘Puzzles of the Digital Millennium Copyright Act’, 46 J.Copyright Soc’y 401 (1999), available at http://ssrn.com/abstract=208876.

A more general indication of Congressional concern about the impact of s.1201 on fair and other privileged uses can arguably be found in s. 1201(c)(1),which states that ‘[n]othing in this section shall affect rights, remedies, limita-tions, or defences to copyright infringement, including fair use, under thistitle.’124 Some members of Congress who spoke about the anti-circumventionrules during the legislative debate over the DMCA seemed genuinely tobelieve this provision constituted a ‘savings clause’ to enable fair and otherprivileged uses of technically protected copyrighted works.125

Finally, Congress established a triennial rulemaking process under whichthe Librarian of Congress (LOC) is directed to examine ‘the impact that theprohibition on the circumvention of technological measures applied to copy-righted works has on criticism, comment, news reporting, teaching, scholar-ship, or research.’126 The Librarian is authorized to create new exceptionsfrom the ban on circumvention to enable public interest uses of copyrightedworks when users of certain classes of copyrighted works show they ‘are, orare likely to be . . . adversely affected’ by the use of TPMs.127

Much contested is whether these provisions of the anti-circumvention rulesmeaningfully contribute to an adequate balance of public and private interestsin the DMCA. The first decision to have considered this question wasUniversal City Studios, Inc. v Reimerdes,128 in which Judge Lewis Kaplanconcluded that Congress had considered, and decided against, allowingcircumventions for fair use or other privileged purposes. ‘If Congress hadmeant the fair use defence to apply to [anti-circumvention] actions, it wouldhave said so. The decision not to make fair use a defence to a claim underSection 1201(a) was quite deliberate.’129

In affirming an injunction against posting or linking to DeCSS, softwaredesigned to bypass the Content Scramble System (CSS) protecting DVDmovies, the Second Circuit rejected the argument that s. 1201(c)(1) was a ‘fairuse savings’ clause. The panel declared that this interpretation ‘is not onlyoutside the range of plausible readings of the provision, but is also clearlyrefuted by the statute’s legislative history.’130


124 17 USC. § 1201(c)(1).125 See e.g., 144 Cong. Rec. H7093 (daily ed. Aug. 4, 1998) (statement of Rep.

Bliley) (indicating that the Commerce Committee understood the DMCA legislation toenable consumers to ‘exercise their historical fair use rights’).

126 17 USC. § 1201(a)(1)(C).127 Id.128 111 F. Supp. 2d 294 (S.D.N.Y. 2000).129 Id. at 322.130 Universal City Studios, Inc. v Corley, 273 F.3d 429, 443 (2d Cir. 2001). But

see Chamberlain Group, Inc. v Skylink Techs., Inc., 381 F.3d 1178, 1200 (Fed. Cir.2004) (regarding s. 1201(c)(1) as a fair use savings clause).

Both the trial court and the Second Circuit considered the triennial rule-making and the narrowly drawn public interest exceptions to s. 1201 asadequately accommodating fair use and other public interests pertaining totechnically protected works.131 Judge Kaplan characterized the argument thatpurchasers of DVD movies have the right to circumvent CSS so long as theydo not infringe copyrights in DVD movies as ‘pure sophistry’ and as ‘a corrup-tion of the first sale doctrine.’132 According to Judge Kaplan, the DMCA anti-circumvention laws ‘fundamentally altered the landscape of copyright’ as totechnology provider liability.133

Seemingly without realizing it,134 Judge Kaplan arguably also closed offanother possible public interest safety valve in the DMCA by construing DeCSSas a tool for circumventing access controls. If CSS is indeed an access control,then bypassing it would violate s. 1201(a)(1)(A). Insofar as TPMs, such as CSS,are deemed ‘access controls’ within the meaning of s. 1201, the public interestcircumventions that the DMCA was supposed to accommodate by not regulat-ing circumvention of non-access-control TPMs have arguably been foreclosed.Copyright owners have apparently recognized that they may be able to defeatsome public interest limitations on the scope of the anti-circumvention rules byadopting persistent access controls as their TPMs of choice.135

Given the hostility that Reimerdes and Corley displayed toward fair use asa limitation on the scope of s. 1201, the next most plausible candidate for anaccommodation of public interest uses of digital content protected by TPMswould seem to be the LOC rulemaking procedure. However, this procedure isnot a sufficient safety valve for several reasons.

First, it only occurs every three years, and any exceptions created only lastfor three years.136 Secondly, it is largely focused on exempting classes of worksrather than classes of uses, although classes of uses are more relevant whenassessing public interest uses.137 Thirdly, proposals for exemptions can only bemade during the rulemaking process, and a heavy burden of proof has been put


131 Reimerdes, 111 F. Supp. 2d at 323; Corley, 273 F.3d at 443.132 Reimerdes, 111 F. Supp. 2d at 317 n.137.133 Id. at 324.134 In discussing circumvention for fair use purposes, Judge Kaplan seemed to

accept that technically sophisticated persons would be able to circumvent CSS to makefair uses of DVD movies without violating the DMCA rules. Id. at 388. Yet, his conclu-sion that CSS is an access control is inconsistent with his conclusion that technicalsophisticates could make fair uses of DVD movies.

135 See e.g., R. Anthony Reese (2003), ‘Will Merging Access Controls andRights Controls Undermine the Structure of Anti-Circumvention Law?’, 18 BerkeleyTech. L.J. 619 (2003).

136 17 USC. § 1201(a)(1)(C)–(D).137 Id.

on the proponent of any particular new exception to show adverse effects onprivileged uses.138 This contrasts sharply with the EU, which seems to placeburdens on its member states and on copyright owners to ensure that privilegeduses can be exercised, even when works are technically protected.139

Fourthly, s. 1201 does not authorize the LOC to create exceptions to thetool rules, only to the act of circumvention rule.140 Without some way toobtain appropriate tools, circumvention privileges may not be meaningful.Fifthly, the LOC has generally construed its rulemaking authority in a narrowmanner.141 For these reasons, we agree with the Electronic FrontierFoundation, a prominent civil liberties group, that ‘the DMCA triennial rule-making is fundamentally unable to protect the interests of today’s digitalmedia consumers.’142

In the latest rulemaking,143 the LOC moved beyond the exemption of‘particular class[es] of works’144 and proposed an exemption focused on a


138 See 17 USC. § 1201(a)(1)(C); Electronic Frontier Foundation, ‘DMCATriennial Rulemaking: Failing the Digital Consumer’ 3 (2005) [hereinafter EFF onRulemaking], available at http://www.eff.org/IP/DMCA/copyrightoffice/DMCA_rulemaking_broken.pdf (explaining why ordinary consumers without copyright coun-sel are unlikely to be able to meet the onerous burden of proof established bythe Copyright Office, but ‘[e]ven with expert assistance, the burdens imposed by theCopyright Office on participants often prove nearly insurmountable’). By focusingthe inquiry on proof of adverse effects on non-infringing uses of classes of works, theDMCA makes it difficult to focus on particular uses, a more relevant criterion for fairuse analysis. See Bill D. Herman and Oscar Gandy (2006), ‘Catch 1201: ALegislative History and Content Analysis of the DMCA Exemption Proceedings’, 24Cardozo Arts & Ent. L.J. 121.

139 See infra ‘The unfulfilled normative commitment underlying Article 6(4)’ atp. 282.

140 See 17 USC. § 1201(a)(1)(D); EFF on Rulemaking, supra n. 121, at 2(‘[A]verage consumers denied access to circumvention tools are not able to make useof the 6 exemptions that have been granted.’). One of us has argued that there shouldbe an implied right to implement a tool to enable a privileged party to make a privi-leged use of technically protected content. Samuelson, supra n. 14, at 554.

141 See e.g., Diane Leenheer Zimmerman (2001), ‘Adrift in the DigitalMillennium Copyright Act: The Sequel’, 26 U. Dayton L. Rev. 279, 283–84. See alsoALA, DMCA Section 1201 – The Anti-Circumvention rule (as updated Dec. 22, 2005),(characterizing the LOC exceptions as ‘narrow’); EFF on Rulemaking, supra n. 121, at7 (pointing out that the Copyright Office has given a narrower interpretation of fair usein the course of its rulemakings than courts and commentators have done).

142 Id. at 1. See also id. at 8 (offering suggestions about how the LOC rulemak-ing could be improved); Aaron Perzanowski (2007), ‘Evolving Standards & The Futureof The DMCAAnticircumvention Rulemaking’, 10 J. Internet L. 1, 20–21 (April 2007)(discussing shortcomings of the DMCA rulemaking process).

143 37 C.F.R. § 201.40(b)(1) (2007).144 See 17 USC. § 1201(a)(1)(B)–(C).

particular type of use by a particular type of user. It created an exception sothat media or film study professors could make compilations of clips fromCSS-protected movies for use in teaching classes.145 Much as the LOCdeserves credit for this innovative interpretation of its s. 1201 authority, thisexemption seems to leave in the lurch everyone else who might want to makefair use clips of CSS-protected movies.146 Many other fair use clips of techni-cally protected content can easily be imagined, but only those who participatein a triennial rulemaking have a chance of having their fair use interestsaccommodated through the rulemaking process.

The LOC rulemaking procedure ‘is a kind of safety valve’ for the DMCAanti-circumvention rules, but as Professor Ginsburg has recently concluded, ‘itmay not let off enough steam.’147 Too many public interest uses of copyrightedworks are being blocked by TPMs.148 The checks and balances that Congressarguably embedded in the DMCA have not achieved the necessary balance.

A better balance among competing interests can be attained within theframework of the DMCA anti-circumvention rules.149 Among the moremodest measures, courts could decide that persistent access controls, such asCSS, are not the kinds of ‘access controls’ that s. 1201(a) actually regulates,which would open up considerably more room for fair use circumventions.150

They could also find in s. 1201(c)(1) a statutory basis for excusing fair usecircumventions.151 They could, moreover, regulate abuses of s. 1201 andabusive uses of TPMs through the anti-circumvention misuse doctrine firstproposed by Professor Burk.152 Courts could additionally interpret the DMCA


145 See 37 C.F.R. § 201.40. For a discussion of the latest rulemaking, see, forexample, Ginsburg, supra n. 14, at 12–17. Ginsburg notes that the film teacher excep-tion ‘departs significantly from prior rule-makings.’ Id. at 12–13.

146 For example, an evidence professor might want to bypass CSS in order to takeclips from movies about trials to show his class how to (and not to) make objections,while a psychology professor might want to make fair use clips of movies to demonstratehow mentally ill people are depicted. We are hopeful that a judge with a broad view of17 USC. § 1201(c)(1) might analogize these and similar fair use circumventions to theexemption granted by the LOC, but there is as yet no precedent for doing so.

147 Ginsburg, supra n. 14, at 16.148 See e.g., Armstrong, supra n. 14, at 68; Benkler, supra n. 14, at 420–27;

Lipton, supra n. 14, at 124–36; Perzanowski, supra n. 142, at 17–18.149 Professors Burk and Cohen have proposed requiring deployers of TPMs to

make unlocking technologies available to enable fair uses by third party escrow agents.Burk and Cohen, supra n. 14, at 65–67. Professor Lipton has proposed that theCopyright Office establish an administrative procedure to assist prospective fair usersof TPM content. Lipton, supra n. 14, at 124.

150 See e.g., Reese, supra n. 135, at 663–64.151 See e.g., Ginsburg, supra n. 14, at 21–22; Samuelson, supra n. 14, at 539–45.152 Dan L. Burk (2003), ‘Anticircumvention Misuse’, 50 UCLA L. Rev. 1095.

anti-circumvention rules as inapplicable to any technology that does not poseserious risks of enabling copyright infringement.153

The stronger measure to achieve balance in the DMCA anti-circumventionregulations that we propose is the reverse notice and takedown regime discussedin the next section. It would not only permit circumvention to enable public inter-est uses of technically protected digital content, but it could provide a mechanismto help those who lack the technical expertise to perform public interest circum-ventions by themselves. In an appropriate case, prospective fair users, after unsuc-cessfully seeking voluntary cooperation from relevant copyright owners, couldseek a declaratory judgment that circumvention for specific public interestpurposes should be permitted. Courts in such cases could order copyright ownersto cooperate with facilitating such circumventions, including, as necessary, provid-ing the key to unlock the TPM that was inhibiting a particular privileged use to theprospective user or designating a circumvention service to facilitate this action.

SETTING THE STAGE FOR A REVERSE NOTICE ANDTAKEDOWN REGIME

The idea for a reverse notice and takedown regime emerged as we reflectedupon two groups of cases that have recently challenged the outer limits ofprotection for copyrighted works in the digital environment. Both have elicitedconsiderable attention and controversy,154 although most commentaries havenot considered the two groups of cases in conjunction with one another. We,however, find in these sets of cases not only a deep symmetry, but the theo-retical underpinnings for judicial evolution of a reverse notice and takedownregime that would permit and enable circumventions of technically protectedcopyrighted content for public interest purposes.

The first group of cases – Napster,155 Aimster,156 and Grokster157 – consid-ered whether online service providers and related software toolmakers who


153 The Federal Circuit opened up this possibility by its far-sighted decision inChamberlain Group, Inc. v Skylink Technologies., Inc., 318 F.3d 1178 (Fed. Cir. 2004),discussed at length infra nn. 241–258 and accompanying text.

154 See e.g., Matthew D. Brown et al. (2005), ‘Secondary Liability for InducingInfringement After MGM v. Grokster: Infringement Prevention and Product Design’, 9 J.Internet L. 21 (Dec. 2005); Stacey Dogan (2001), ‘Is Napster a VCR? The Implicationsof Sony for Napster and Other Internet Technologies’, 52 Hastings L.J. 939; Mark A.Lemley and R. Anthony Reese (2004), ‘Reducing Digital Copyright Infringement with-out Restricting Innovation’, 56 Stan. L. Rev. 1345; Lipton, supra n. 14.

155 A&M Records, Inc. v Napster Inc., 239 F.3d 1004 (9th Cir. 2001).156 In re Aimster Copyright Litigation, 334 F.3d 643 (7th Cir. 2003).157 Metro-Goldwyn-Mayer Studios Inc. v Grokster Ltd., 545 US 913 (2005).

facilitated P2P file sharing of copyrighted sound recordings by a multitude ofindividual direct infringers should be held indirectly liable for their users’infringing acts. (We will call these the ‘dissemination technology cases.’)Entertainment industry plaintiffs in these cases believed that the scale ofinfringements enabled by these technologies was so vast that courts would bewilling to move away from the Sony safe harbour for technologies withsubstantial non-infringing uses in favour of a ‘primary use’ test for technology/service developer liability under copyright law.158

As in the legislative debate that produced the DMCA, the entertainmentindustry dismissed as unimportant expressions of concern about the public’sinterest in access to these technologies and services for non-infringingpurposes if the entertainment industry gained greater control over technologydevelopment.159 Notwithstanding the many arguments and amicus briefs thatthe industry marshalled in favour of the primary use test,160 the Supreme Courtmaintained a balanced approach to technology/service developer liability inGrokster. It preserved the Sony safe harbour for technology developers exceptas to those who actively induce copyright infringement.161 As in Sony, theCourt was attentive to the interests of the public in access to dual-use tech-nologies for non-infringing purposes.162

In the second group of cases – Chamberlain,163 Lexmark,164 and


158 See Brief for Motion Picture Studio and Recording Company Petitioners,Metro-Goldwyn-Mayer Studios v. Grokster Ltd., 545 US 913 (2005) (No. 04-480),available at http://www.eff.org/IP/P2P/MGM_v_Grokster/04-480_Petitioners_brief.pdf [hereinafter MGM Brief]. Recall that the Court had rejected, albeit only justbarely so, a primary use test for indirect liability for copyright infringement in the Sonycase. See supra n. 73 and accompanying text. Section 1201 adopts a variant on theprimary use test for circumvention technology liability. While in theory a ‘primarypurpose or design’ test, as in the DMCA, is more rigorous than the ‘primary use’ testfor which Universal argued in Sony, we are skeptical about how different they wouldbe in practice, given that when a technology is primarily used for an illicit purpose, achallenger of that technology will almost certainly argue that the technology must havebeen designed to facilitate these illicit uses and that any testimony about beneficialpurposes for the design are self-serving misrepresentations to avoid liability. See IPProfessor Amicus Brief, supra n. 81, at 559–61.

159 See e.g., MGM Brief, supra n. 158, 18–20.160 The many amicus briefs filed in support of MGM’s appeal are available at

http://www.eff.org/IP/P2P/MGM_v_Grokster/.161 Grokster, 545 US at 937.162 Id. at 920 (‘Given [their] benefits in security, cost, and efficiency, peer to peer

networks are employed to store and distribute electronic files by universities, govern-mental agencies, corporations, and libraries among others.’).

163 Chamberlain Group, Inc. v Skylink Techs., Inc., 381 F.3d 1178 (Fed. Cir. 2004).164 Lexmark Int’l, Inc. v Static Control Components, Inc., 387 F.3d 522 (6th Cir.

2004).

StorageTek165 – makers of technologies claimed that by embedding softwareaccess controls inside their products, they had obtained the right to control themarket for replacement parts or repair services. (We will call these the ‘lock-out technology’ cases.) The courts ultimately decided these cases by permit-ting third-party suppliers of parts or services to bypass the lock-out codes andprovide competing parts or services, notwithstanding the amplified rights ofcopyright owners under the anti-circumvention provisions of the DMCA.166

Judges in the lock-out cases could not accept the unbalanced interpretation ofs. 1201 that the plaintiffs had constructed on the foundation laid by Reimerdesand Corley.

Both groups of cases focus attention on the extent to which recent legisla-tive efforts to bolster the protection of copyright owners operating in the digi-tal environment have unduly narrowed or sacrificed the interests of users,follow-on improvers, competitors, and the public at large that were corecomponents of pre-digital traditional copyright law. In practical terms,however, the two groups of cases affect the public interest at diametricallyopposite ends of the spectrum of protected rights.

This section will show that the dissemination technology cases have impli-cations for public interest users who want to access copyrighted works forunauthorized but non-infringing purposes when the works in question havebeen surrounded by TPMs designed to prevent unauthorized uses. The dissem-ination technology cases also have implications for the right of public interestusers to access technologies that enable lawful uses. These cases recognizeboth the legitimacy of user access to equipment that enables non-infringinguses and the need for incentives to persuade manufacturers to invest in andcreate innovative technology, such as P2P file-sharing software, that canenhance non-infringing uses of copyrighted works.167 By articulating a theorythat took the ‘bad’ technology developers out of the picture, as the SupremeCourt did with its active inducement rule in Grokster, the Court created aclimate in which public interest uses could more freshly be assessed bothgenerally and as they pertain to circumvention of TPMs.

The lock-out technology cases contribute further to this fresh approach byrejecting the plaintiffs’ anti-competitive s. 1201 claims as unsound and byimporting balancing principles from copyright and patent law as essential tothe proper interpretation of s. 1201. Among other things, the courts inChamberlain and StorageTek recognized the need to guard the public’s inter-est in making fair and other non-infringing uses of technically protected


165 Storage Tech. Corp. v Custom Hardware Eng’g & Consulting, Inc., 421 F.3d1307 (Fed. Cir. 2005).

166 Digital Millennium Copyright Act, 17 USC. §§ 1201-05 (2000).167 See e.g., Lemley and Reese, supra n. 154.

content. The lock-out cases, in our view, set the stage for judicial developmentof the reverse notice and takedown procedure we endorse in this chapter.

The Dissemination Technology Cases: Napster, Aimster, and Grokster

In approaching the dissemination technology cases and the controversies theyhave provoked, we offer some preliminary observations. First, there are veryfew privileged public interest uses directly at stake when consumers use P2Pfile-sharing technologies to download entire musical works and sound record-ings without payment to authors, artists, and recording studios. Unless onebelieves that copyrights are an inherently illegitimate form of property, onecannot readily defend the limitless free-riding on copyrighted works that P2Pfile sharing has engendered in terms of traditional exceptions to copyrightprotection.168

One may lament the demise of any equivalent of the first sale doctrine inthe online environment,169 and one may castigate record companies for cling-ing too long to outdated business models, without viewing the downloaders asprincipled defenders of the public interest. Had the DMCA not so shamelesslysacrificed the public interest provisions of copyright law on the altar ofTPMs,170 few copyright law professors would express so much alarm aboutthe cases expanding third-party liability for contributory and vicariousinfringement.171

What alarms the critics is precisely the potential capacity of the dissemi-nation technology cases, if mishandled by the courts, to exacerbate the imbal-ance found in the DMCA’s anti-circumvention rules and thereby to furtherreduce the bona fide and legitimate rights of users, improvers, competitors,and the public at large. From this perspective, every expansion of third-party


168 Some have argued that the public interest might better have been served by aliability rule than a property rule in response to the P2P file-sharing phenomenon, thatis, by grant of a compulsory license to allow file sharing of copyrighted works fornoncommercial purposes. See e.g., William W. Fisher III (2004), Promises to Keep:Technology, Law and the Future of Entertainment; Neil Weinstock Netanel (2003),‘Impose a Noncommercial Use Levy to Allow Free Peer-to-Peer File Sharing’, 17Harvard J. L. & Tech. 1; see generally J. H. Reichman (2000), ‘Of Green Tulips andLegal Kudzu: Repackaging Rights in Subpatentable Innovation, 53 V and. L. Rev. 1743(theory of compensatory liability regime). This would have ensured that revenueswould flow back to the composers, performers, and producers of sound recordingswhile also ensuring that the works were widely distributed.

169 17 USC. §§ 106(3), 109 (2000).170 See e.g., Litman, supra n. 26, at 122–45.171 See e.g., IP Professor Amicus Brief, supra n. 81, at 556–57 (expressing

concern about expansion of technology developer liability rules).

liability in this group of cases could potentially further inhibit the alreadylimited range of public interest exceptions to copyright protection. Perhapsworst of all, it could further undermine the incentives to invest in technologiesneeded for the sharing of information goods for legitimate and importantpublic-good purposes.172

The validity of these concerns must, however, be tested against the actualholdings in these cases. Napster, Aimster, and Grokster operated onlineservices that supplied P2P technologies to enable users of their software tosearch for digital files of commercially distributed copyrighted works on otherusers’ computers, connect directly to the other users’ computers in order tomake copies of the desired files, and transfer the copies to the requestingusers’ computers.173 The principal defence of these P2P developers againstcharges of secondary liability for copyright infringement was that they quali-fied for the Sony safe harbour for technologies with substantial non-infringinguses,174 although Napster also raised two DMCA ISP safe harbourdefences.175

Napster’s Sony defence characterized the downloading of MP3 files autho-rized by new artists, the sampling of songs users planned to buy if they likedthem, and the archival copying of sound recordings users already owned assubstantial non-infringing uses of its technology.176 Because of the massiveamounts of infringement taking place through use of these P2P services, theentertainment industry plaintiffs argued that the Sony safe harbour should notbe available for services, or alternatively, that it should only be available ifthe primary use of the challenged technology was non-infringing, as inSony.177 Another reason to sue this P2P service was that ‘it was easier and


172 See Lemley and Reese, supra n. 154, at 1354–56 (discussing problems of‘dual-use’ technologies that can be used in both non-infringing and infringing capaci-ties).

173 A&M Records, Inc. v Napster Inc., 239 F.3d 1004, 1011 (9th Cir. 2001).Napster differed from Aimster and Grokster in that its servers hosted indices throughwhich users could directly search for specific files they wanted to download. Id. at1012.

174 See e.g., Raymond Shih Ray Ku (2002), ‘The Creative Destruction ofCopyright: Napster and the New Economics of Digital Technology’, 69 U. Chi. L. Rev.263.

175 A&M Records, Inc. v Napster, Inc., 114 F. Supp. 2d 896, 919 n.4 (N.D. Cal.2000); A&M Records, Inc. v Napster, Inc., 2000 WL 573136, at *3 (N.D. Cal. 2000)[hereinafter Napster II].

176 Napster, 114 F. Supp. 2d at 916.177 Id. at 916 and n. 20. The primary use of the Betamax machine was to make

copies of television programs for time-shifting purposes, a use that the Court held wasfair. Sony Corp. of Am. v. Universal City Studios, Inc., 464 US 417, 423–24 (1984).

more effective to shut down Napster than to sue the millions of people whoillegally traded files on Napster.’178

Napster was hardly a neutral ISP providing a vehicle for innocent trans-missions of honest exchanges of information or opinions. Yet, it nonethelessclaimed immunity under the s. 512(a) safe harbour for Internet transmissionsinitiated by others179 and the s. 512(d) safe harbour for information locatingtools.180 The courts in Napster rejected its statutory safe harbour defences.181

Although Napster’s network was capable of some non-infringing uses, the factremained that, as the Ninth Circuit observed, Napster knew or should haveknown that massive infringements were underway, and its business successdepended on encouraging these infringements.182 In hindsight, Napster’sclaim to shelter under the Sony safe harbour was undermined by its activeinducement of infringement, as the Supreme Court later phrased it inGrokster.183

The court in Napster seemed self-consciously to draw parallels betweencontributory infringement and the safeguards established for ISPs under s. 512by suggesting that a system operator could avoid liability by purging infring-ing materials when it knew or should have known about them.184 Obviously,


178 Lemley and Reese, supra n. 137, at 1349. Lichtman and Landes argue thatsuing third parties instead of the actual direct infringers can be efficient when theformer, although only indirectly responsible, are ‘typically in a good position to eitherprevent copyright infringement or pay for the harm it causes.’ See Lichtman andLandes, supra n. 86, at 409.

179 Napster II, at *6–*8 (ruling on Napster’s s. 512(a) defense).180 Napster, 114 F. Supp. 2d at 919 n. 24. Napster argued that absent notice from

the copyright holder, it had no way of knowing which transfers were infringing trans-fers. Brief for Defendant-Appellant Napster, Inc. at 52, A&M Records, Inc. v Napster,Inc. 114 F. Supp. 2d 896 (N.D. Cal. 2000) (Nos. 00-16401 and 00-16403), available athttp://www.eff.org/IP/P2P/Napster/brief0818.pdf.

181 Napster II, supra n. 158, at *6–*8 (rejecting a s. 512(a) defence); Napster,114 F. Supp. 2d at 919 n. 4.

182 Napster, 239 F.3d at 1020 n. 5.183 See Metro-Goldwyn-Mayer Studios Inc. v Grokster Ltd., 545 US 913, 936–38

(2005).184 The Ninth Circuit Court of Appeals stated that ‘if a computer system operator

learns of specific infringing material available on his system and fails to purge suchmaterial from the system, the operator knows of and contributes to direct infringe-ment.’ Napster, 239 F.3d at 1021 (quoting Religious Tech. Ctr. (RTC) v Netcom On-Line Commc’n Servs., Inc., 907 F. Supp. 1361, 1374 (N.D. Cal. 1995)). The NinthCircuit invoked Sony, where the Supreme Court held that if liability had to be imposed,‘it must rest on the fact that they have sold equipment with constructive knowledge ofthe fact that their customers may use that equipment to make unauthorized copies ofcopyrighted material.’ Id. at 1020 (quoting Sony Corp. of Am. v Universal City Studios,Inc., 464 US 417, 439 (1984) (emphasis added)). Although the Supreme Court in Sony

a true contributory infringer, such as Napster, had no interest in this safe-guard.185

Perhaps the most interesting aspect of the Napster case was the districtcourt’s characterization of Napster’s system as a potential barrier to entry forhonest purveyors of downloaded music operating under a fee-based system.186

Here, indeed, is a positive nexus to Sony,187 because the Supreme Court’srefusal to ban manufacture of VTRs owing to their substantial non-infringinguses removed an inchoate barrier to entry into the movie rental and cassettebusiness.188 This result became an unforeseen bonanza for film studios thatmade considerable revenues by selling movies to rental companies and toconsumers. In contrast, the district court correctly perceived the oppositeeffect in the Napster case, and the growth of fee-based providers via iTunesand other systems in the aftermath of Napster’s closure would seem to vindi-cate that thesis.189

Aimster, like Napster, made loose, self-serving assertions about the capa-bility of the relevant software system for non-infringing uses, but this wasdisingenuous coming from someone whose business knowingly depended onthe highest possible volume of infringing uses.190 By co-opting the instantmessaging networks of other ISPs to enable file sharers to find each other andsearch each other’s autonomous files, Aimster’s contributory acts were moreremote and indirect than Napster’s.191 But Aimster’s business objectivesdepended largely on the volume of its infringing uses; its main business activ-ity was to facilitate these same infringing uses; and it structured its computerarchitecture so as not to know anything about the specific acts of infringementit did its best to facilitate.192 Club Aimster, furthermore, gave users access tothe top 40 songs on the charts for a mere $4.95 a month.193


did not clarify what could qualify as constructive knowledge, the Court in Napsterfound that the company had materially contributed to the direct infringement commit-ted by end users, since it had provided them with ‘the site and the facilities’ withoutwhich copyright violations could not have been committed. Napster, 239 F.3d at1022–23.

185 Id.186 Napster, 239 F.3d at 1016.187 See Sony Corp. of Am. v Universal City Studios, Inc., 464 US 417 (1984).188 See e.g., Lardner, supra n. 69, at 297–313.189 See e.g., IFPI, Digital Music Report 2007, at 4 (2007), available at

http://www.ifpi.org/content/library/digital-music-report-2007.pdf (‘Digital music salesare estimated to have almost doubled in value worldwide in 2006, reaching an esti-mated trade value of around US $2 billion’).

190 In re Aimster Copyright Litigation, 334 F.3d 643, 651 (7th Cir. 2003).191 Id. at 646.192 Id. at 650.193 Id. at 651–52.

Although the Seventh Circuit’s Aimster decision expressed some concernabout not unduly impeding substantial non-infringing uses under Sony, it alsotoyed with imposing potentially burdensome obligations on technology devel-opers to build in infringement-inhibiting technological measures.194 The force ofthis speculation has been greatly weakened by the doctrine of ‘actively inducinginfringement,’ on which the Supreme Court finally settled in Grokster.195 Inhindsight, it seems that the Seventh Circuit in Aimster was really groping its waytoward the doctrine of active inducement later recognized in Grokster.

In Grokster, the software system at issue provided a range of means bywhich users could search through the pools of shared files while connectingdirectly with each other, and without reference to any central index hosted bydefendants.196 Neither Grokster nor its co-defendant Streamcast ‘operated thenetwork over which the users of their software connected and exchanged files,and the [district] court emphasized the decentralized nature of thosenetworks,’ in the sense that ‘no information is transmitted to or through anycomputers owned or controlled by the software makers.’197 The lower courtalso recognized that the software was capable of substantial non-infringinguses, including the authorized dissemination of copyrighted works anddissemination of unprotected works.198 For the district court, and later theNinth Circuit, the distance of the software providers from the sites of infringe-ment and their lack of active knowledge of specific infringements was suffi-cient to shelter them from contributory liability under the Sony exception,given the potential non-infringing uses to which the software could be put.199

For the Supreme Court, however, Grokster and Streamcast had forfeited thesafe harbour established in Sony for technologies with substantial non-infring-ing uses, which the Court had drawn from patent law. In Grokster, the Court


194 See id. at 648.195 See Metro-Goldwyn-Mayer Studios Inc. v Grokster Ltd., 545 US 913, 948–49

(2005) (Ginsburg, J., concurring).196 See id. at 920–22.197 Lemley and Reese, supra n. 154, at 1364. In particular, the Ninth Circuit, quot-

ing the District Court, explained: ‘[E]ven if the Software Distributors ‘closed their doorsand deactivated all computers within their control, users of their products could continuesharing files with little or no interruption.’’ See Metro-Goldwyn-Mayer Studios Inc. vGrokster Ltd., 380 F. 3d 1154, 1164 (9th Cir. 2004) (quoting Metro-Goldwyn-MayerStudios Inc. v Grokster Ltd., 259 F. Supp. 2d 1029, 1041 (C.D. Cal. 2003)).

198 See Grokster, 545 US at 935.199 Grokster, 259 F. Supp. 2d at 1036 (‘[T]he existence of substantial non-infring-

ing uses turns not only on a product’s current uses, but also on potential future non-infringing uses.’); Grokster, 380 F.3d at 1161 (‘[I]f the product at issue is capable ofsubstantial or commercially significant non-infringing uses, then the copyright ownermust demonstrate that the defendant had reasonable knowledge of specific infringingfiles and failed to act on that knowledge to prevent infringement.’)

drew upon another complementary patent law doctrine that disallowed the safeharbour if the defendant had actively induced copyright infringement.200

Using this approach, neither the relative degrees of remoteness or of the mate-rial contribution in the three cases, nor the relative weights of some potentialnon-infringing uses – allegedly rising to a possible 10 percent of all uses inGrokster – could vindicate a Sony defence if the underlying intent of the oper-ation was to actively induce copyright infringement.201

While some contend that this resolution will unduly chill innovation indual-use technologies,202 we have a more optimistic assessment of whatGrokster accomplished. The Grokster decision rejected several proposals tolimit the scope of the Sony safe harbour. It did not, for instance, excludeservices, as such, from the Sony safe harbour. It did not adopt any particularstandard of intolerable infringing uses. Moreover, it did not adopt a ‘primaryuse’ test for judging the lawfulness of dual-use technologies.203 The Courtpreserved the safe harbour for technologies with substantial non-infringinguses and focused instead on evidence of actions that demonstrated active andintentional promotion of infringement, which disqualified the defendants fromthe shelter of copyright’s variant on patent law’s staple article of commercelimitation.204

The extent to which suppliers of dual-use technologies may still benefitfrom a Sony safe harbour remains to be worked out in future cases, and caremust be taken not to impair or undervalue actual non-infringing uses wherethey occur in a good faith context. Over time, however, it has become clearthat the recording industry cannot cling to obsolete business models thatoblige consumers to purchase music they do not want, and that this industrycannot attain control over P2P technology. Rather, as the district court inNapster correctly foresaw, shutting down firms such as Napster effectively


200 See Grokster, 545 US at 935.201 In Sony, the Supreme Court explained that the application of the staple arti-

cle of commerce doctrine required Betamax products to be capable of commerciallysignificant non-infringing uses, meaning that VCRs should be capable of at least onepotential legitimate use employed in a numerically significant manner. See Sony Corp.of Am. v Universal City Studios, Inc., 464 US 417, 442–43 (1984). The ultimateoutcome of the case was deeply influenced by the Court’s finding that unauthorizedtime-shifting was indeed a legitimate fair use.

202 See e.g., Rob Hof, ‘Larry Lessig: Grokster Decision Will Chill Innovation’,Bus. Week Online, 28 June 2005; Fred von Lohmann, ‘Remedying Grokster’, Law.com,25 July 2005, http://www.law.com/jsp/article.jsp?id=1122023112436.

203 Pamela Samuelson (2005), ‘Legally Speaking: Did MGM Really Win theGrokster Case?’, 48 Comm. of the ACM 19 (October 2005) (pointing out that the Courtrejected virtually all of MGM’s proposed tests for liability).

204 Id.

removed barriers to the entry of fee-based music distribution systems,205 suchas Apple’s iTunes service. This arguably helped to support the formation of anew business model that may benefit consumers and competition in the longrun.

As to the future prospects for non-infringing users of dual-use technologiesin general, we cannot accurately evaluate them through the lens of cases deal-ing with bad faith active inducers of infringement. Moreover, when we try toenvision such cases through a cleaner lens, the real barriers to entry will notlie so much in the weakness of the Sony safe harbour as in the potentially trou-blesome intersection between ss. 512 and 1201 of the DMCA.206

Implications for Public Interest Uses of Technically Protected Content

Our concern with dual-use technologies that impede non-infringing usesacquires considerably more traction the moment we try to envision the real lifeobstacles likely to be encountered by legally privileged non-infringing usergroups who, by definition, advance some public interest consonant with, ratherthan antagonistic to, the goals of copyright protection. Here we are concernedwith gaining access to copyrighted works in the digital environment in orderto extract unprotectable subject matter, such as ideas and disparate facts; tomake fair uses of protectable expressions, including research uses; and toexploit codified exceptions to, or limitations on, the bundle of exclusiverights.207 Also of concern is access to works whose copyrights have expiredbut which cannot readily be located in public domain copies outside a givendigitally controlled network.208

Facilitating public interest user groups under section 512By focusing on user groups whose typically non-profit activities are thoughtto advance the public interest in education, research, science, and technologi-cal progress, we immediately dispel the atmosphere of mistrust arising from


205 See A&M Records, Inc. v Napster Inc., 239 F.3d 1004, 1016 (9th Cir. 2001).206 17 USC. §§ 512, 1201 (2000).207 17 USC. §§ 102(a), 107–122 (2000).208 See e.g., Jonathan Band (2005), ‘The Google Print Library Project: A

Copyright Analysis’, J. of Internet Banking and Com. (December 2005) (discussingprojects to digitize public domain and copyrighted works in major library collections).In theory, anti-circumvention liability should not lie for public interest users whobypass TPMs to gain access to public domain works. However, if publishers use thesame TPM to protect copyrighted and public domain works, then any tool that wouldbypass this TPM will arguably be illegal under s. 1201 because of the copyrightedmaterial also being protected by it.

Napster, Aimster and Grokster, and allow courts to think positively about theneed to balance public and private interests, as they traditionally sought to doin the pre-digital era.209 Only when defendants begin to appear in a good faithposture can we really discern what is at stake when the courts make appropri-ate judgments about the public’s interest in access to technologies capable ofsubstantial non-infringing uses.

Of course, P2P systems such as Napster, Aimster and Grokster could notlong survive in such an atmosphere because they depend, directly or indirectly,on benefits derived from infringing uses. Private foundations, public entities,and public-private partnerships have already found good reasons to establishP2P file-sharing networks to promote access to information goods for non-infringing public interest purposes. For example, Creative Commons hasestablished such networks for specific subject matter groupings,210 and scien-tific efforts to link databases in virtual archives through P2P technologies211

are growing in number.212 Science Commons, an affiliate of CreativeCommons, has unveiled plans to vigorously employ such technologies in anumber of major projects.213

These initiatives are likely to increasingly rely on P2P technologies toenable participants to access and share privately held materials, whether copy-righted or not, that have been voluntarily made available to advance the goalsof the different user communities in question. Because such communities are,


209 Cf. WCT, supra n. 1, Preamble (‘The contracting parties, . . . [r]ecognizingthe need to maintain a balance between the rights of authors and the larger public inter-est, particularly education, research and access to information, as reflected in the BerneConvention . . . . ‘ ) We do not mean to suggest that educators, researchers, and thelike are the only parties who should be eligible to make public interest uses of techni-cally protected copyrighted works. Many commercial firms engage in fair and otherprivileged uses, and they too should qualify for the reverse notice and takedownregime. We focus on the nonprofit public interest users in order to make the moregeneral case for the need for the reverse notice regime, as these users are generallyperceived in a favourable light in copyright discourse.

210 See Creative Commons, http://www.creativecommons.org.211 See generally J. H. Reichman and Paul F. Uhlir (2003), ‘A Contractually

Reconstructed Research Commons for Scientific Data in a Highly ProtectionistIntellectual Property Environment’, 66 Law & Contemp. Probs. 315; Nat’l ResearchCouncil, The Role of Scientific and Technical Data and Information in the PublicDomain (J. M. Esanu and Paul F. Uhlir, eds. 2003).

212 See e.g., Peter Dawyndt et al. (2006), ‘Contributions of Bioinformatics andIntellectual Property Rights in Sharing Biological Information’, 188 Int’l Soc. Sci. J.249; Harlan Onsrud and James Campbell (2007), ‘Big Opportunities in Access to SmallScience Data’, Data Sci. J. See also Science Commons, http://science.creativecom-mons.org

213 See id.; see also Abby Seff (2007), ‘Will John Wilbanks Launch the NextScientific Revolution?’, Popular Science (July 2007).

as a rule, loosely organized and administered, they cannot and should not becharged with the duties of policing the contents of materials made available tothe community for copyright infringement. Fortunately, so long as such groupstake pains to position their networks within the penumbra of s. 512 of theDMCA, they can obtain all the sharing advantages of P2P systems whilelargely immunizing themselves from liability for copyright infringement byvirtue of the ‘notice and takedown’ procedures that this provision sets up.214

Moreover, s. 512 procedures allow systems managers to vet any infringe-ment claims lodged against participating contributors and to refuse to complywith a takedown request if they choose to back their member’s claim of priv-ileged use against an outsider’s claim of infringement.215 Even in a worst casescenario, where the outsider’s infringement claim ultimately prevails in a courtof law, the public interest goals of the user community should encouragecourts in this situation to narrowly tailor injunctions so as to avoid inhibitingany legitimate non-infringing uses.216

The ‘notice and takedown’ modalities of s. 512 thus make it possible tokeep P2P networks running for non-profit public interest purposes. Moreover,the ‘clean hands’ legitimacy of the enterprise should at least ensure that noinjunction otherwise affecting some infringing uses of the technology in ques-tion would shut down or impede such public interest initiatives. Nor is thereanything in the Supreme Court’s Grokster decision that creates an insuperablebarrier to entry for launching these initiatives.217

Yet, once a public interest P2P file-sharing network is up and running,problems may arise insofar as the technology allows community members tolink to external non-member ISPs where copyrighted works have beendeposited on conditions that restrict use or reuse of the material availablethere. A risk of conflict exists between the search potential of the software toenable non-infringing uses of posted material and the obligations of theservice provider to respect the dictates of the copyright owners it hosts on itssite. However, assuming that the service provider was covered by s. 512 of theDMCA, this conflict could normally be resolved by ‘notice and takedown’provisions with which we are familiar.


214 17 USC. § 512 (2000).215 Id. at § 512(g).216 Public interest uses of protected works might also be facilitated if courts made

more use of the Court’s suggestion about the appropriateness of damage awards insteadof injunctions in close fair use cases. See Campbell v Acuff-Rose Music, Inc., 510 US569, 578 n.10 (1994).

217 Indeed, the opening section of the Grokster decision speaks in positive termsabout P2P technologies. Metro-Goldwyn-Mayer Studios Inc. v Grokster Ltd., 545 US913, 920–21 (2005).

Under s. 512, all of the standard copyright exceptions and defences arepreserved even after the ‘notice and takedown’ machinery superimposed uponthem has been triggered. If the information locating tool triggers an objectionfrom the copyright owner, the searcher can respond by asserting the non-infringing uses (for example, fair uses) that he intends to make of the protectedwork in question. If the copyright owner acquiesces, the problem is solved. Ifnot, the putative fair user can seek a declaratory judgment to remove the obsta-cle and vindicate the non-infringing use.

Clearly, these legal modalities would benefit from expeditious administra-tive procedures to promptly resolve such disputes at low cost, with deferredremoval to courts only for specific issues that merited a full dress trial.218 Ourpoint is that, so long as we are dealing with traditional copyright defences, s.512 of the DMCA poses no serious barriers to entry for our putative publicinterest initiative.

How public interest uses may be frustrated by section 1201Serious problems may arise, however, when copyright owners surround infor-mation products available on their websites with technological fences specifi-cally designed to thwart, for example, the search and sharing capabilities ofthe non-infringing, would-be public interest users.219 TPM fences mayinitially prevent searchers from gaining access for the purpose of browsingcontents in order to identify material of interest.220 The same fences may thendirect would-be non-infringing users to an electronic gateway, where elec-tronic contracts of adhesion will condition entry on a waiver of all the users’rights that our putative searchers might otherwise put forward to justify accessto and use of the information product in question.221 The electronic fence will


218 See e.g., Lemley and Reese, supra n. 154, at 1410–25.219 Firms that want to use TPMs to protect public domain works can, of course,

take the precaution of attaching to any bulky ineligible matter, such as a noncreativedatabase, some copyrightable fig leaf component, such as an explanatory introduction,in order to bring the collective work as a whole within s. 102(a) of the Copyright Actand trigger the additional protections of s. 1201 of the DMCA. For implications forscience, see Reichman an Uhlir (2003), supra n. 211, at 376–79.

220 The DMCA provides an exemption from s. 1201(a)(1)(A) for nonprofitlibraries, archives, and educational institutions to bypass access controls ‘solely inorder to make a good faith determination of whether to acquire a copy of that work.’17 USC. § 1201(d). This exemption would not, however, apply if the purpose of thecircumvention was to index the work or to extract unprotectable facts, ideas, or publicdomain materials from the technically protected work.

221 See J. H. Reichman & Jonathan A. Franklin (1999), ‘Privately LegislatedIntellectual Property Rights: Reconciling Freedom of Contract with Public Good Usesof Information’, 147 U. Penn L. Rev. 875. See also Burk, supra n. 152 (discussing anti-circumvention misuse).

thus separate access from use. Insofar as s. 1201(c) permits circumvention forprivileged purposes,222 this will arguably only kick in after lawful access hasbeen gained. Yet, by then, user rights may have been abrogated by contract,and it may already be too late to hack through the electronic fence prohibitedby s. 1201.223

Ironically, this scenario inverts the situation found in cases such as Napster,Aimster, and Grokster where facilitators of mass infringements sought to hidebehind potential non-infringing uses. Here, instead, bona fide non-infringingusers risk being thwarted by copyright owners who use access control TPMsto disable privileged uses.

By using TPMs, copyright owners arguably gain the power to opt out ofthose parts of the copyright system they dislike. They cannot only designTPMs to circumvent public interest uses, but can claim shelter behind s. 1201for doing so. Because some cases have construed s. 1201 as abrogating fair useand other public interest exceptions as grounds for circumventing TPMs toextract non-infringing material, the public interest goals of the non-infringinguser may be absolutely defeated by the TPM.224 The DMCA does not explic-itly allow circumvention for legally permissible purposes, although this wouldhave been consistent with the WCT and seems to have been the intent of somein Congress.

From this perspective, s. 1201 arguably functions as a form of ‘activeinducement’ to avoid the public interest exceptions embodied in the CopyrightAct. Copyright owners employ TPMs and s. 1201 protections in order tothwart infringing uses of their works. However, TPMs may protect against allunauthorized uses, both infringing and non-infringing. Although it is techni-cally difficult to differentiate between these two classes of uses prospectively,firms could do more to facilitate some public interest uses of technicallyprotected content if they chose to do so. There is as yet no incentive for copy-right owners or TPM vendors to fine tune TPMs to enable non-infringinguses.225

Thus, unless there is a way for s. 1201 to be construed to recognize thelegitimacy of access to enable non-infringing uses, the statute could become a


222 See supra nn. 121–127 and accompanying text for a discussion of s. 1201 andprivileged uses.

223 17 USC. § 1201 (2000).224 See Ginsburg, supra n. 14.225 One interesting experiment in designing TPMs with fair use in mind is the

open source digital rights management technology that Sun Microsystems is develop-ing for digital content that would enable many fair uses. See Gerard Fernando et al.,‘Project DReaM, An Architectural Overview’ (September 2005), http://www.openmediacommons.org/collateral/DReaM-Overview.pdf.

one-way ratchet for attaining complete enclosure of digital content.226 At thevery least, it establishes a potential barrier to entry for some meritorious publicinterest initiatives of the kind envisioned above, and it tends to chill invest-ment in developing viable dual-use technologies that could promote more effi-cient non-infringing uses.227

The Reimerdes decision has unfortunately provided considerable ammu-nition for the gutting of the public interest balance in copyright law bysetting forth a framework for analyzing s. 1201 claims that, if followed insubsequent cases, excludes consideration of virtually all public interestconcerns. Under Judge Kaplan’s interpretation of s. 1201, anti-circumven-tion liability arises: (1) if a copyright owner has adopted a TPM to controlaccess to its copyrighted works (even if they are persistent access controlssuch as CSS); and (2) if an unauthorized person has developed a technologythat bypasses this TPM (relying, if necessary, on an inference that if thedefendant’s technology bypasses the TPM, it must have been primarilydesigned or produced to do so).228 Under Reimerdes, it is irrelevant whethercopyright infringement has occurred (or was even possible) as a result of theavailability of the circumvention tool. Nor does it matter whether the toolmight enable consumers to tinker with a copyrighted work he or she haspurchased.229

Harm to the copyright owner’s interests is presumed from the fact of theviolation.230 In Judge Kaplan’s view, Congress deliberately decided againstpermitting circumvention or making circumvention tools to enable fair orother public interest uses of technically protected digital content, and s.1201(c) provided no shelter for public interest uses once copyright ownershave deployed technical locks on their content.231

The Lock-out Technology Cases: Chamberlain, Lexmark, and StorageTek

Although Congress seems to have thought the DMCA anti-circumventionrules would protect copyright owners from massive infringements,232 it did


226 Cf. James Boyle (2003), The Second Enclosure Movement, 66 L. & Contem.Probs. 33.

227 See Lemley and Reese, supra n. 154, at 1390.228 Universal City Studios, Inc. v Reimerdes, 111 F. Supp. 2d 294, 317–19

(S.D.N.Y. 2000). See also Universal City Studios, Inc. v Reimerdes, 82 F. Supp. 2d 211,217 (S.D.N.Y. 2000).

229 Reimerdes, 111 F. Supp. 2d at 314–16, 317 n. 137.230 Reimerdes, 82 F. Supp. 2d at 215.231 Reimerdes, 111 F. Supp. 2d at 322–24.232 See S. Rep. No. 105–190, at 8 (1998) (expressing concern about massive

piracy as a reason for adopting anti-circumvention rules).

not take long for some technology developers to realize that these rules, asinterpreted in Reimerdes, were susceptible to use as a tool for defeatingcompetition in the market for uncopyrightable products and services.233

Technology developers Lexmark, Chamberlain, and Storage TechnologyCorp. (‘StorageTek’) relied on Reimerdes in claiming that the DMCA’s anti-circumvention rules conferred on them the right to control access, throughdigital lock-out codes, to software embedded in their products so as to preventcompetitors from supplying after-market replacement parts or services.234

The lock-out technology casesLexmark, a manufacturer of printers and toner cartridges, claimed that theauthentication protocol (or digital handshake) component of copyrightedcomputer programs installed on chips in its printers and toner cartridges wasan access control, the bypassing of which violated s. 1201(a)(1)(A).235

Because Static Control made chips designed and produced to bypass thisaccess control, Lexmark charged it with violating s. 1201(a)(2).236 StaticControl’s customers were manufacturers of toner cartridges designed to workin Lexmark printers. The trial court, relying heavily on Reimerdes, issued apreliminary injunction against Static Control’s manufacture of these chips.237

The Sixth Circuit eventually reversed, seemingly on the ground that theDMCA does not apply to digital fences limiting access to functional aspects ofthe printers.238 The court’s reasoning on the anti-circumvention claim is,


233 See e.g., Pamela Samuelson and Suzanne Scotchmer (2002), ‘The Law andEconomics of Reverse Engineering’, 111 Yale L.J. 1575, 1642–49 (predicting technol-ogy developer misuses of the DMCA rules).

234 Lexmark Int’l, Inc. v Static Control Components, Inc., 387 F.3d 522 (6th Cir.2004); Chamberlain Group, Inc. v Skylink Techs., Inc., 381 F.3d 1178 (Fed. Cir. 2004);Storage Tech. Corp. v Custom Hardware, Eng’g & Consulting, Inc., 421 F.3d 1307(Fed. Cir. 2005).

235 Lexmark, 387 F.3d at 528–32. Static Control successfully challenged thevalidity of the copyright in the toner cartridge software because it was a short programwith limited functionality and copying was necessary in order to make compatiblecartridges capable of running on Lexmark machines. Id. at 535–42.

236 Id. at 531.237 Lexmark Int’l, Inc. v Static Control Components, Inc., 253 F. Supp. 2d 943

(E.D. Ky. 2003).238 The court observed:

In the essential setting where the DMCA applies, the copyright protection operateson two planes: in the literal code governing the work and in the visual or audiomanifestation generated by the code’s execution. For example, the encoded data onCDs translates into music and on DVDs into motion pictures, while the programcommands in software for video games or computers translate into some other

unfortunately, neither very coherent nor persuasive.239 A concurring judgewould more forthrightly have invoked the misuse doctrine, so as to ‘makeclear that in the future companies like Lexmark cannot use the DMCA inconjunction with copyright law to create monopolies of manufactured goodsfor themselves just by tweaking the facts of [a] case.’240

Shortly after issuance of the preliminary injunction in Lexmark, a similarattempt was made to use the anti-circumvention rules to foreclose competitionin the market for electronic garage-door opening (GDO) devices.241 Skylinkmade a universal GDO that bypassed the digitized ‘lock-out’ (access control)components of programs Chamberlain had installed in its GDOs and transmit-ters. Chamberlain argued that the ‘plain language’ of the DMCA and prece-dents such as Reimerdes and the lower court decision in Lexmark providedcompelling support for its claim against Skylink.242 The Federal Circuitstrongly disagreed and upheld the lower court’s grant of summary judgment toSkylink.

The Chamberlain decision is remarkable in several respects. A fundamen-tal premise underlying the Federal Circuit’s interpretation of s. 1201 was itsperception that Congress had intended the DMCA anti-circumvention rules tobe balanced:

The most significant and consistent theme running throughout the entire legislativehistory of the anti-circumvention and anti-trafficking provisions of the DMCA . . .is that Congress attempted to balance competing interests, and ‘endeavoured tospecify, with as much clarity as possible, how the right against anti-circumventionwould be qualified to maintain balance between the interests of content creators andinformation users.’ H.R. Rep. No. 105–551, at 26 (1998). The Report of the House


visual and audio manifestation. . . . The copyrightable expression in the PrinterEngine Program, by contrast, operates on only one plane: in the literal elements ofthe program, its source and object code. Unlike the code underlying video games orDVDs, ‘using’ or executing the Printer Engine Program does not in turn create anyprotected expression. Instead, the program’s output is purely functional.

Lexmark, 387 F.3d at 548.239 Id. at 545–51. The court, for example, questioned whether the Lexmark

authentication sequence was an access control within s. 1201 by observing thatpurchase of a Lexmark printer allowed access to the program. Id. at 549–50. Becauseit was possible to access the toner cartridge program if one bought a printer and tonercartridge, the court questioned whether the sequence was an effective access controlmeasure. Id.

240 Id. at 551.241 Chamberlain Group, Inc. v Skylink Techs., Inc., 292 F. Supp. 2d 1040 (N. D.

Ill. 2003), aff’d, 381 F.3d 1178 (Fed. Cir. 2004).242 Chamberlain Group, Inc. v Skylink Techs., Inc., 381 F.3d 1178, 1186, 1192

(Fed. Cir. 2004).

Commerce Committee concluded that § 1201 ‘fully respects and extends into thedigital environment the bedrock principle of “balance” in American intellectualproperty law for the benefit of both copyright owners and users’.243

It consequently rejected the notion that the DMCA had created a new exclu-sive right in copyright owners to control access to their works.244 Section 1201should instead be viewed as providing copyright owners with a new cause ofaction when circumvention of access controls threatened their ability toenforce their exclusive rights under copyright law.

In its search for a more balanced interpretation of the DMCA, the courtconsidered at length linkages between the anti-circumvention rules and rightsconferred by copyright law:

Statutory structure and legislative history both make clear that § 1201 applies onlyto circumventions reasonably related to [copyright] protected rights. Defendantswho traffic in devices that circumvent access controls in ways that facilitateinfringement may be subject to liability under § 1201(a)(2). . . . [D]efendantswhose circumvention devices do not facilitate infringement are not subject to§ 1201 liability.245

Without proof of a nexus between the availability of an allegedly unlawfulcircumvention tool and the existence, or grave threat, of copyright infringement,s. 1201 liability should not be imposed.246 Thus, it was relevant that:

Chamberlain has not alleged that Skylink’s Model 39 infringes its copyrights, norhas it alleged that the Model 39 contributes to third-party infringement of its copy-rights. . . . Chamberlain urges us to conclude that no necessary connection existsbetween access and copyrights. Congress could not have intended such a broadreading of the DMCA.247

To the extent that Reimerdes said otherwise, the Federal Circuit disagreed.Under Chamberlain’s interpretation of the DMCA, ‘the owners of a work

protected both by copyright and a technological measure that effectivelycontrols access to that work . . . would possess unlimited rights to holdcircumventors liable under § 1201(a) merely for accessing that work even if


243 Id. at 1195.244 Id. at 1192–93. The Federal Circuit has thus rejected the views of some

commentators that s. 1201, in effect, created an exclusive right of access. See e.g., JaneC. Ginsburg, ‘Copyright Legislation for the “Digital Millennium”,’ 23 Colum. J. L. &Arts 137, 140–43 (1999).

245 Chamberlain, 381 F.3d at 1195.246 Id. at 1195–97.247 Id. at 1197.

that access enabled only rights that the Copyright Act grants to the public.’248

The Federal Circuit found this construction of the DMCA ‘problematic for anumber of reasons.’249

For one thing, Congress’s exercise of its constitutional authority must berational; yet, as construed by Chamberlain, s. 1201(a) ‘borders on the irra-tional.’250 For another, its interpretation of s. 1201(a) ‘would flatly contradict§ 1201(c)(1) – a simultaneously enacted provision of the same statute.’251 Itwas consequently necessary to adopt ‘an alternative construction that leads tono such contradiction.’252

Construing s.1201(a) as though it was concerned only with control overaccess, and not with rights protected by copyright law, would be ‘both absurdand disastrous.’253 It would ‘allow any manufacturer of any product to add asingle copyrighted sentence or software fragment to its product, wrap thecopyrighted material in a trivial “encryption” scheme, and thereby gain theright to restrict consumers’ rights to use its products in conjunction withcompeting products.’254 This would ‘allow virtually any company to attemptto leverage its sales into aftermarket monopolies,’ even though this would beunlawful under the antitrust laws and the copyright misuse doctrine.255

At least as problematic to the Federal Circuit were the implications ofChamberlain’s interpretation of s. 1201 for the rights of consumers to makefair uses:

Chamberlain’s proposed construction would allow copyright owners to prohibitexclusively fair uses even in the absence of any feared foul use. It would thereforeallow any copyright owners through a combination of contractual terms and tech-nological measures, to repeal the fair use doctrine with respect to an individualcopyrighted work – or even selected copies of that copyrighted work. Again, thisimplication contradicts § 1201(c)(1) directly. . . . Consumers who purchase aproduct have the inherent legal right to use that copy of the software. What the lawauthorizes, Chamberlain cannot revoke.256


248 Id. at 1200.249 Id.250 Id.251 Id. ‘A provision that prohibited access without regard to the rest of the

Copyright Act would clearly affect rights and limitations, if not remedies anddefenses.’ Id.

252 Id.253 Id. at 1201.254 Id. For analogous concerns about the need for courts to carefully manage

boundaries between different modes of intellectual property protection, see BonitoBoats, Inc. v Thunder Craft Boats, Inc., 489 US 141 (1989), which struck down Floridaanti-plug mold law as contrary to patent law and policy.

255 Chamberlain, 381 F.3d at 1201.256 Id. at 1202.

Contrary to Chamberlain’s contention, which relied on dicta from Reimerdes,‘the DMCA emphatically did not “fundamentally alter” the legal landscapegoverning the reasonable expectations of consumers or competitors; did not“fundamentally alter” the ways that courts analyze industry practices; and didnot render the pre-DMCA history of the GDO industry irrelevant.’257 TheFederal Circuit consequently rejected Chamberlain’s interpretation of s. 1201‘in its entirety’.258

The Federal Circuit had a second opportunity to consider the scope of theanti-circumvention rules in StorageTek.259 StorageTek manufactures automatedtape cartridge libraries for mass data storage. When StorageTek sells its tapelibraries to customers, it licenses customers to use the functional code formanaging the tape libraries but not the code to carry out maintenance func-tions.260 Custom Hardware Engineering (‘CHE’) is an independent businessthat repairs data libraries manufactured by StorageTek. To enable it to carry outthese repairs, CHE developed a program that bypassed a password protectionscheme in the StorageTek maintenance code so that it could effectively inter-cept and interpret error messages generated by that program. Processing theerror code information enabled CHE to diagnose and repair data libraries forStorageTek’s customers. StorageTek claimed that CHE had violated theDMCA anti-circumvention rules.261

Relying on its analysis in Chamberlain, the Federal Circuit found no DMCAviolation: ‘To the extent that [the defendant’s] activities do not constitute copy-right infringement or facilitate copyright infringement, StorageTek is foreclosedfrom maintaining an action under the DMCA. That result follows because theDMCA must be read in the context of the Copyright Act, which balances therights of the copyright owner against the public’s interest in having appropriateaccess to the work.’262 Even if activation of the maintenance code might violatethe firm’s contractual rights with customers, this unauthorized activation of thecode could not violate the DMCA because the contractual rights ‘are not therights protected by copyright law.’263 Without proof of a nexus between the


257 Id. at 1194.258 Id.259 Storage Tech. Corp. v Custom Hardware, Eng’g & Consulting, Inc., 421 F.3d

1307 (Fed. Cir. 2005).260 Id. at 1309–10.261 StorageTek also claimed copyright infringement. A majority of the Federal

Circuit decided that the 17 USC. § 117 safe harbor for computer maintenance servicesprotected CHE’s activities. Storage Tech. Corp., 421 F.3d at 1311–18.

262 Id. at 1318. However, the StorageTek decision opens the disquieting possibil-ity that a better-drafted contract could exclude the provision of competing repairservices by express terms that this court would uphold. Id. at 1316–17.

263 Id. at 1319.

rights protected by copyright law and the circumvention of the TPM, no viola-tion of the DMCA anti-circumvention rules could occur.264

Broader implications of the lock-out technology casesWhile this trio of cases – Lexmark, Chamberlain and StorageTek – reached theright results, they failed to consider a fundamental postulate of US intellectualproperty law, namely, that the exclusive rights that copyright law conferscannot be used to defeat competitive uses of non-copyrightable functionalproducts or features that are suitable for regulation under the more pro-competitive mandate of the patent laws.265 This proposition, established by theSupreme Court in the 1880 landmark case of Baker v Selden and extended byBaker’s progeny, stands for the necessity of maintaining a clear line of demar-cation between industrial and artistic property laws.266 Properly understood,Baker v Selden authorizes intermediate copying of even an entire copy-rightable work in order to extract the non-copyrightable functional elements,so long as the competitor’s ultimate production avoids any unnecessary takingof protected expression.267

Unfortunately, some commentators have obscured the pristine meaning ofBaker v Selden,268 which Professor Kaplan, among others, clearly under-stood.269 There has been a regrettable tendency to treat Baker as merely


264 Id.265 Baker v Selden, 101 US 99 (1880). See e.g., Sega Enters. Ltd. v Accolade,

Inc., 977 F.2d 1510 (9th Cir. 1993) (affirming the lawfulness of reverse engineering ofcopyrighted software to get access to interface information which was beyond thescope of copyright protection); Atari Games Corp. v Nintendo of Am., Inc., 975 F.2d832 (Fed. Cir. 1993) (accord).

266 See generally J. H. Reichman (1989), ‘Computer Programs as AppliedScientific Know-How: Implications of Copyright Protection for CommercializedUniversity Research’, 42 Vand. L. Rev. 639, 649 n. 288 (analysing historical meaningof Baker v Selden and criticizing commentators’ misinterpretations, especially that ofMelville Nimmer’s treatise); Pamela Samuelson (2007), ‘Why Copyright Law DoesNot Protect Processes and Systems’, 85 Tex. L. Rev. 1921, 1944–61 (demonstrating thatNimmer’s interpretation of Baker is unsound).

267 See Pamela Samuelson, ‘Baker v. Selden: Sharpening the DistinctionBetween Authorship and Invention’, in Intellectual Property Stories 181, 181–92(Rochelle Cooper Dreyfuss and Jane C. Ginsburg, eds. 2004) (discussing Baker’s repu-diation of copyright protection for useful arts and its implications for the lawfulness ofreverse engineering uncopyrightable technologies).

268 See e.g., Melville B. Nimmer and David Nimmer, Nimmer on Copyright §§2.03, 2.18 (2006) (interpreting Baker narrowly).

269 See Benjamin Kaplan, An Unhurried View of Copyright 63–66 (1966). Seealso Reichman, supra n. 249, at 649 n. 288; Samuelson, supra n. 249, at 1953–61;Lloyd L. Weinreb (1998), ‘Copyright for Functional Expression’, 111 Harv. L. Rev.1149, 1175.

endorsing a form of fair use in cases involving functional works270 rather thanas an independent and fundamental, perhaps even constitutionally based,subject matter requirement of the federal intellectual property system.271

Baker v Selden, properly understood, establishes fundamental limits on theability of copyright owners to exercise control over the development of tech-nologies because this would bypass the strictures of the patent law.272 Becauseof this, the DMCA cannot override Baker, and its fundamental policy prescrip-tions cannot be frustrated by the provisions of that Act.273 There is, moreover,no legislative history suggesting that Congress intended to override Baker andits progeny in adopting the DMCA anti-circumvention rules.

The Federal Circuit deserves considerable praise for expressly recognizingthat balance is a bedrock principle of intellectual property law and for devel-oping a framework for interpreting s. 1201 that enables courts to develop abalanced approach to interpretation of the DMCA’s anti-circumvention rulesinsofar as copyright owners try to use them to block fair and other non-infring-ing uses of technically protected copyrighted works. Just as the court inNetcom rejected the White Paper’s unbalanced and overly broad interpretation


270 Sega Enters. Ltd. v Accolade, Inc., 977 F.2d 1510 (9th Cir. 1993); AtariGames Corp. v Nintendo of Am., Inc., 975 F.2d 832 (Fed. Cir. 1993).

271 US Const. Art. I, § 8, cl. 8 (giving Congress power to ‘promote the progressof science and useful arts, by securing to authors and inventors exclusive rights forlimited times for their respective writings and discoveries’ (emphasis added)). See alsoJ.H. Reichman, ‘Legal Hybrids Between the Patent and Copyright Paradigms’, 94Colum. L. Rev. 2432 (1994) (discussing the fundamental premises of patent and copy-right regimes).

272 Insofar as Sony held that technologies lacking in substantial non-infringinguses can be regulated by copyright law, even if technologies with substantial non-infringing uses cannot be, we regard Sony as consistent with Baker’s fundamentalprecepts.

273 We are concerned about whether federal appellate courts will vindicate thepristine meaning of Baker v Selden or even perceive its critical importance for satis-factorily resolving this class of cases on more than ad hoc, tentative grounds. We arealso concerned about the Federal Circuit’s tendency to defer in some cases to so-called‘contractual’ terms (regardless of the lack of meaningful assent by the ‘licensee’) ofmass-marketed products, which undermines our confidence in the staying power of thatcourt as a check on abuses of public interest limitations on intellectual property rights.See e.g., Monsanto Co. v McFarling, 363 F.3d 1331 (Fed. Cir. 2004) (enforcing‘license’ on a bag of seeds sold to a farmer). Courts dealing with Lexmark orChamberlain-like DMCA claims may find it useful to consider Professor Burk’sintriguing theories of ‘anticircumvention misuse.’ Burk, supra n. 135. This would avertthe risk posed if the DMCA anti-circumvention rules allowed every product sold on thegeneral products market to obtain 150 years of copyright protection behind digitizedelectronic fences that have nothing to do with the protection of literary and artisticworks.

of the reproduction right,274 courts interpreting s.1201 should rejectReimerdes’ unbalanced and overly broad interpretation of s. 1201 in favour ofthe framework set forth in Chamberlain and StorageTek, which we believe isfar more consistent with the letter and spirit of the WCT and withCongressional intent in enacting the anti-circumvention rules.

The Reverse Notice and Takedown Framework

Building on the insights of Chamberlain and StorageTek, courts faced withpublic interest challenges to the DMCA anti-circumvention rules shouldfollow Netcom’s lead by developing a notice and takedown approach tobalancing the interests of copyright owners and the public. A reverse noticeand takedown procedure to enable privileged uses of technically protectedworks is consistent with s. 1201. It would lower the barrier to entry for publicinterest users and reconcile the tensions between s. 1201(a) and 1201(c).

The basic conceptUnder our proposal, any confrontation between the user community’s effortsto make non-infringing uses of material available to the public on a websiteand the copyright owners’ technological fencing under s. 1201 could elicit ademand from the user group for a right to a limited bypassing of TPMs forlegitimate purposes. For example, they might assert a need to index the mate-rial in question and extract specified components, in order to complete a spec-ified non-infringing project. Copyright owners could be given 14 days eitherto object to the limited circumvention or to allow it by silence, without preju-dice. In case of denial, the user group would be entitled to seek a declaratoryjudgment to vindicate its claim to an entitlement to circumvent a TPM for thepurpose of engaging in the specified non-infringing use.

To become fully operational, this proposal would benefit from standardizedprocedures concerning the form in which notice should be given to copyrightowners for ‘reverse notice and takedown’ demands. It would also requirecourts to allow those providing needed decryption skills and technology tobenefit from the same privileged use exception that a demandeur had ulti-mately vindicated either in court or by silent acquiescence of the copyrightowner. Above all, such a regime would particularly benefit from the kind ofexpeditious, low-cost administrative tribunals proposed in other contexts.275

These long-term considerations should not, however, obscure the feasibil-ity or desirability of immediately instituting ad hoc case-by-case judicially


274 See supra n. 33 and accompanying text.275 See e.g., Lipton, supra n. 14, at 149–55.

devised reverse notice and takedown procedures to promote the formation ofa jurisprudence of permissible non-infringing uses of technically protectedcontent to complement and supplement the jurisprudence of infringing usesdiscussed above.276 Netcom has shown that courts in the US can evolvebalanced solutions in response to digital copyright problems. Reverse noticeand takedown procedures could attenuate the tension between s. 1201(a) of theDMCA, which on its face seems oblivious to fair use and other permissibleuses of technically protected content, and s. 1201(c), which seeks to preservepublic interest uses. The exact contours for attaining this goal need to beworked out over time.

Section 1201(a) might seem to imply that it is not lawful to develop self-helpdecryption devices to crack the technological fence and remove unprotected orunprotectable matter. But bona fide non-infringing users should be able to peti-tion for the right to have a tool to extract specified matter for specified non-infringing uses. If these proposals are documented by supporting evidence, theycould trigger recourse to s. 1201(c) in order to prevent s. 1201 from perverselythwarting legislatively and judicially sanctioned permitted uses.

Resort to a reverse notice and takedown procedure of this kind would helpmake the DMCA into an instrument that promotes adequate protection of copy-righted works without creating barriers to entry that thwart new technologies forsharing unprotected matter. It could facilitate licensing to non-profit entities onreasonable terms and conditions, and it could help to frustrate growing tenden-cies to put public domain matter off limits by encasing it in impenetrable elec-tronic fences. It could also attenuate the systematic use of digitized, electronicprior restraints on speech, which are likely to eventually provoke constitu-tional challenges.277 Indeed, an extension of the reverse notice and takedownmodel could present would-be users of public domain material with a work-able choice between sustaining the costs of securing and implementing judi-cially approved circumvention or purchasing the public domain matter fromthe vendor at reasonable prices for the sake of convenience.

Illustrative applicationsBelow are four examples of situations in which courts might find the proposedreverse notice and takedown procedure useful:278


276 After all, the ‘notice and take down’ provisions of s. 512 of the DMCAemerged from a negotiated compromise derived from the teachings of prior case lawon contributory infringement in the digital environment. See supra nn. 36–57 andaccompanying text.

277 Cf. Benkler, supra n. 14, at 414–29 (challenging the constitutionality of theDMCA anti-circumvention rules); Ginsburg, supra n. 14, at 21 (anticipating such chal-lenges).

278 These examples largely reflect the scope for the proposed reverse notice and

(1) Some years ago, the American Civil Liberties Union challenged theconstitutionality of a law requiring public libraries to install filtering soft-ware if they take funds to promote Internet access to patrons. The filterswere meant to protect minors from accessing indecent or otherwiseharmful materials. However, such software under- and over-blockscontent, and it impedes access to materials which, though harmful tominors, may qualify as constitutionally protected speech for adults.279

When the Supreme Court ultimately ruled against the constitutional chal-lenge, it recognized the under- and over-blocking problem, and held thatover-blocking interfered with the legitimate interests of adults in access-ing some blocked materials.280

The challenge for libraries since that decision has been to decidewhether to install filters, and if installed, which filtering software tochoose. Libraries may want to conduct a comparative assessment of theefficacy of software filtering programs, but filtering software will likelyuse TPMs to block access to the list of sites that the software blocks.Because makers of filtering software are likely to consider block-lists asproprietary trade secrets, they are unlikely to agree to bypassing theTPMs. Library staff may also lack sufficient expertise to bypass theTPMs to make such an assessment.281


takedown procedure under US law. As we explain at p. 281, we believe that the reversenotice and takedown procedure would also be an appropriate and desirable means forEU member states to implement their obligations under the Copyright Directive. Butthe precise scope of those obligations is a matter that different member states have readdifferently. See infra text accompanying nn. 309–310. For other examples of publicinterest uses that have been or may be thwarted or chilled by the DMCA, see e.g.,Benkler, supra n. 14, at 388–89; Ginsburg, supra n. 14, at 20; Lipton, supra n. 14, at113–15; Sadd, supra n. 14, at 321–22; Samuelson, supra n. 14, at 544–45, 548–49, 553.See also Electronic Frontier Foundation, Unintended Consequences: Seven Yearsunder the DMCA (as updated April 2006) available at http://www.eff.org/IP/DMCA/DMCA_unintended_v4.pdf.

279 United States v Am. Library Ass’n, 539 US 194 (2003).280 Justices Kennedy and Breyer thought that the interests of adults in access to a

wider array of materials was adequately addressed by provisions of the Congressionallegislation that allowed libraries to unblock sites for patrons wishing to view blockedbut nonetheless lawful content. Id. at 214–15 (Kennedy, J., concurring); id. at 215–20(Breyer, J., concurring). Unblocking may, however, involve circumvention of a TPM,which could run afoul of s. 1201(a)(1)(A).

281 See Pamela Samuelson (2007), ‘Principles for Resolving Conflicts BetweenTrade Secrets and the First Amendment’, 58 Hastings L.J. 777, 790–91 (discussing aneffort to reverse engineer a TPM to get access to block-list information for filteringtechnologies, such as those widely used by libraries, that was thwarted by threats ofDMCA anti-circumvention liability).

It is in the public interest for libraries to have access to this informa-tion. Under a reverse notice and takedown procedure, a court could orderthe software filtering firms to take down the TPMs so that the compara-tive analysis could take place. The software filter developer could peti-tion the court to condition the takedown on the libraries’ willingness notto reveal the trade secret block-lists. We have confidence that courtscould fashion appropriate relief that balanced the interests of the librariesin being able to communicate findings with other librarians and the inter-ests of the software developers in keeping the list data secret.

(2) A linguistics professor might want to develop a compilation of clips frommovies to show that the word ‘redskins’ in Western movies has beensystematically used in a derogatory fashion.282 If this professor is not atechnically sophisticated person, he or she may not be able to bypass CSSin order to make these clips from DVD movies. If the professor requestsaccess to unprotected forms of these movies to engage in the stated fairuses and this request is ignored or denied by the motion picture studiocopyright owners, the linguistics professor should be able to ask a courtto order the studios to provide the appropriate access to the movies or toauthorize the takedown by a circumvention service on their behalf.283

(3) The Computer History Museum is among the entities that might want toundertake a project to preserve computer programs written during the1960s to early 1980s.284 Some software developers have employedTPMs to control access to the programs; many programs are, moreover,stored in now-obsolete formats and/or on obsolete storage media thathave effectively become TPMs. A Computer History Museum researcher


282 See Samuelson, supra n. 14, at 540 (giving this example). Public interest usersshould not, in our judgment, have to undertake extra expense and effort to search forpossible alternative formats for the works of which they want to make fair use when atechnically protected format is near at hand. In this respect, we join the EFF’s criticismof the Copyright Office for its unwillingness to consider the inconvenience andexpense of such efforts as a factor favouring permitting fair use exemptions for suchusers. See EFF on Rulemaking, supra n. 138, at 4–5.

283 See e.g., Ginsburg, supra n. 14, at 17 (suggesting that judges could authorizecircumvention services to facilitate fair uses of works protected by TPMs).

284 It is not entirely clear whether computer programs in machine-executableforms would have been protectable under the Copyright Act of 1909, although the USCopyright Office began accepting registration of computer programs as copyrightableworks in the mid-1960s. See Copyright Office Circular 31D (January 1965), reprintedin Duncan M. Davidson, ‘Protecting Computer Software: A Comprehensive Analysis’,1983 Ariz. St. L.J. 611, 652 n. 72. Obviously, bypassing a TPM protecting access toprograms written in this period would not give rise to s. 1201 liability if the programswere not copyrightable, but the risk for a preservationist in circumventing these oldTPMs would nevertheless be real, given the registrations accepted then.

would have to bypass the TPMs to preserve this historical material andstore it in updated formats. Rather than waiting three years for the nextLOC rulemaking,285 Computer History Museum personnel should beable to ask a court to issue a reverse notice and takedown order insofaras copyright owners of the software did not agree or could not be foundto give consent to bypassing the TPM.286

(4) Security researchers are often interested in reverse engineering TPMs,such as those used to protect commercially distributed sound recordings,for purposes such as determining if the TPMs might cause software to beinstalled on users’ computers that would cause the computers to bevulnerable to security attacks or that might surreptitiously monitor andreport back on users’ behaviours.287 Undertaking such research wouldalmost certainly involve bypassing the TPM and making tools to do so.Given the narrowness of the encryption research or computer securitytesting exceptions to s. 1201, this activity would probably not qualify fora statutory safe harbour.288 Yet, the work would nevertheless be in the


285 17 USC. § 1201(a)(1)(C). There is currently a partial exemption for librariesand archives to bypass a TPM to preserve digital content stored in obsolete formats, butthis may not apply to museums and it certainly does not authorize the making of toolsin order to engage in such circumventions. See Perzanowski, supra n. 142, at 16(discussing the narrowness of the exception for obsolete formats).

286 Difficulties in locating copyright owners have prevented many creative andeducational reuses of copyrighted works, especially many older ones. The USCopyright Office has proposed allowing reuses of so-called ‘orphan works’ to proceedif the reusers have made reasonably diligent efforts to seek permissions. See USCopyright Office, Report on Orphan Works 8 (2006). A similar problem may arise withTPMs. With the possibility of up to $2500 of statutory damages per circumvention atstake for violation of s. 1201, see 17 USC. § 1203(c)(3), there is a risk that public inter-est users, such as archivists, would be deterred from preservation activities. With areverse notice and takedown procedure, the archivist could be assured that he or shewould incur no liability for this circumvention as long as he or she did not infringecopyrights in the works.

287 See e.g., Deirdre Mulligan and Aaron Perzanowski (2007), ‘TheMagnificence of the Disaster: Reconstructing the Sony BMG Rootkit Incident’, 22Berkeley Tech. L.J. 1157. Another public interest issue posed not only by the SonyBMG rootkit incident but more generally is that right holders do not always give noticethat they have deployed TPMs in mass-marketed digital content. Without notice ofTPMs, it becomes possible to inadvertently violate ss. 1201(a)(1)(A) and 1201(a)(2) ifone reverse engineers a purchased copy of digital content.

288 If, for example, the TPM does not use encryption, but some other technique,the encryption research exception would, strictly speaking, not apply. See 17 USC. §1201(g). The computer security testing exception only applies if one is testing acomputer network for security flaws. Id. at § 1201(j). The unduly narrow nature ofthese exceptions is discussed in: National Research Council, The Digital Dilemma:Intellectual Property in the Information Age 171–76 (2001).

public interest, even if the right holder in the sound recording did notapprove of this activity.

Security researchers ought to be able to engage in such reverse engi-neering and to disclose the results of their research at scientific confer-ences.289 In keeping with the reverse notice and takedown regime, acourt could determine that research-related activities of this sort arelawful under a proper interpretation of s. 1201.

Other considerationsAlthough it would be more cost-effective to have a streamlined administrativeprocess for considering reverse notice and takedown requests,290 a judicially


289 See e.g., Joseph P. Liu (2003), ‘The DMCA and the Regulation of ScientificResearch’, 18 Berkeley Tech. L.J. 501, 528–37 (arguing for flexibility in the anti-circumvention regulations as applied to scientific research). It is worth pointing out thatsecurity researchers are unlikely to be interested in getting access to the digital contentprotected by the TPM; they are primarily interested in the TPM itself and how it mightinteract with the content. As long as such researchers do not engage in or knowinglyfacilitate copyright infringement, their activities should not violate the DMCA. Areverse notice and takedown regime could be adapted to facilitate such research.

290 See e.g., Lipton, supra n. 14, at 155 (‘Administrative approaches tend to bemore flexible and less formal in their procedures than judicial processes and are gener-ally less costly than judicial hearings.’). We recognize that our proposal has at least twodisadvantages. First, few prospective privileged users may have the resources to seekjudicial support for reverse notice and takedown challenges to technically protectedcontent, and second, the prospective privileged users will have to identify themselvesto the copyright owner rather than making spontaneous fair or other non-infringinguses without informing the relevant copyright owners. See Burk and Cohen, supra n.14, at 59–61 (‘[A] preauthorization requirement would be costly and would chill spon-taneous uses. . . . [A]pplication to a third party is likely to compromise the sort ofanonymity that users presently enjoy. . . . Spontaneous uses likely would disappearaltogether. . . . [U]nder this system, fair use might become the sole provenance ofwell-capitalized firms with the resources to engage in the process.’).

The first problem may be mitigated by the rise of public interest organizations(including nonprofit organizations such as the Electronic Frontier Foundation and hightechnology clinics such as those in operation at American University, Boalt Hall,Stanford, and USC Law Schools) with the capacity to represent prospective fair users.Moreover, in time, an administrative process might be set up to resolve these chal-lenges, as Lipton proposes, supra n. 14, at 149–55.

As to the second problem, a comparative approach is necessary. Realistically, the fairuse infrastructure that Burk and Cohen propose is less likely to be achievable than thereverse notice and takedown procedure we propose. So while their proposal is moresocially optimal than ours in that copyright owners would not have to know the iden-tity of the prospective fair user, ours is more socially optimal in that courts can actu-ally make it happen. Moreover, a reverse notice and takedown procedure might, intime, lead to something akin to the fair use infrastructure they envision, if copyright

developed case-by-case evolution is, in our judgment, preferable to a statuto-rily mandated administrative process. The case-by-case approach is moredynamic, flexible, and responsive to the fine details of each situation. It is,moreover, likely to lead to a normative framework for dealing with suchrequests. We fear that a statutorily created administrative process at this pointwould remain vulnerable to political economy problems akin to those thatbrought about the unbalanced DMCA anti-circumvention rules in 1998.

Once the courts develop normative baselines for dealing with reversenotice and takedown requests, however, an administrative process couldevolve over time to apply and refine this normative framework. This develop-ment could also induce copyright owners to engage in private initiativesconsistent with this framework, such as designating circumvention services towhich putative public interest users might apply to obtain circumvention fornon-infringing purposes.291

We believe that courts will be able to discern when putative public interestusers are not acting in good faith when making reverse notice and takedownrequests. Courts can also put in place safeguards to ensure that the reversenotice and takedown regime does not bring about the increased infringementsthat the DMCA was enacted to avoid (for example, by ordering copyrightowners to make use of trusted circumvention services rather than orderingtakedowns of the TPMs that might lead to massive infringements).

Whether courts in the United States will, in practice, defend good faithpublic interest communities against technologically induced inhibitors of non-infringing uses with the same zeal they have thus far used in guarding againstonline inducers of infringement in Napster, Aimster, and Grokster remains tobe seen. Certainly, the logic with which the courts have justified limitations onregulation of dual-use technologies resonates with similar concerns to vindi-cate non-infringing uses of technically protected content and to remove barri-ers now thwarting development of appropriate technologies to achieve thisgoal. A judicially engrafted reverse notice and takedown solution couldprovide a minimalist bridging device to achieve this balance. Chamberlain andStorageTek provide a conceptual framework for an interpretation of s. 1201out of which the reverse notice and takedown approach we propose coulddevelop through common law adjudication.


owners found it more efficient to designate a service to deal with public good circum-vention claims instead of having to respond to them on a regular basis.

291 Indeed, this may be a way to accomplish the ‘fair use infrastructure’ that Burkand Cohen envisioned some years ago. See Burk and Cohen, supra n. 14.

REVERSE NOTICE AND TAKEDOWN AS A MODE OFIMPLEMENTING ARTICLE 6(4) OF THE EU COPYRIGHTDIRECTIVE

As noted earlier, the reverse notice and takedown approach is eminentlyconsistent with the WCT, which expressly reserved legally permitted usesfrom the scope of the obligatory anti-circumvention measures.292 In countriesthat adopted the treaty verbatim, such as Japan, there can be no domestic orinternational objections to any effort to introduce the reverse takedown andnotice approach. Because of the civil law traditions prevalent in the EU, itwould not be feasible for member states to adopt the reverse notice and take-down regime through common law litigation. So it is fortunate that the EUCopyright Directive has provided a general (if incomplete) framework formember states to achieve a balanced solution by providing legal reinforcementof TPMs used by copyright owners to protect their works while at the sametime enabling public interest uses of technically protected content.

Indeed, Art. 6(4) of the EU Copyright Directive requires member states toadopt mechanisms that preserve the ability of users to take advantage ofcertain exceptions and limitations guaranteed by copyright law notwithstand-ing the application of TPMs.293 The proposed reverse notice and takedownprocedure is one way in which member states could fulfil that obligation.294

Moreover, such a procedure would effectuate the basic normative commitmentto the continued availability of exceptions to exclusive rights expressed in Art.6(4).295 In fact, it does so more fully than current member state implementa-tion of the Article (which has arguably been confined by textual limits on thescope of Art. 6(4)) itself.296


292 WCT, supra n. 1, Art. 11, which states:

Contracting Parties shall provide adequate legal protection and effective legal reme-dies against the circumvention of effective technological measures that are used byauthors in connection with the exercise of their rights under this Treaty or the BerneConvention and that restrict acts, in respect of their works, which are not authorizedby the authors concerned or permitted by law.

Id. (emphasis added).293 See Copyright Directive, supra n. 10, Art. 6(4).294 See infra ‘Application of reverse notice and takedown under Article 6(4)’ at

p. 288.295 See infra ‘The unfulfilled normative commitment underlying Article 6(4)’ at

p. 282.296 See infra text accompanying nn. 294–297. For a summary and analysis of

member state implementation, see Guido Westkamp, ‘The Implementation of Directive

In this section, we explain the basic contours of Art. 6(4) of the Directive,and how adoption of the reverse notice and takedown procedure would imple-ment member states’ obligations under that provision. This discussion alsoallows us to elaborate further on some aspects of the proposal alreadymentioned in this chapter.

The Unfulfilled Normative Commitment Underlying Article 6(4)

The EU Copyright Directive starts from the general normative position thatexceptions and limitations that would have been available absent the applica-tion of TPMs should remain available notwithstanding the application of suchmeasures.297 Unlike the DMCA, the Copyright Directive does not contain alist of exemptions from the circumvention prohibitions.298

However, the EU legislators were aware of the risk that TPMs might becomean absolute prohibition restricting users from engaging in acts permitted under


2001/29/EC in the Member States’ (Feb. 2007), in Copyright Directive ImplementationStudy, supra n. 11.

297 See Copyright Directive, supra n. 10, Art. 6(4). Of course, this is not the onlynormative commitment embodied in the Directive. The Commission also sought tocreate a climate in which copyright owners would pursue new business models foronline distribution of content. Reconciliation of these competing policy objectives mayexplain, although not coherently, the different constrictions on Art. 6(4). See infra textaccompanying nn. 311–314.

298 Recitals 48 and 51 of the Directive suggest the possibility of exemptions forcryptography research and public security. See id., recitals 48, 51. See also Richard Li-Dar Wang, ‘DMCA Anti-Circumvention Provisions in a Different Light: Perspectivesfrom Transnational Observation of Five Jurisdictions’, 34 AIPLA Q.J. 217, 237 (2006).Because the Directive lacks any specific exemptions, it is seen by some as rejecting anyright of ‘self-help.’ However, some member states have implemented rights of self-helpto circumvent TPM under strict conditions. See Copyright Directive ImplementationStudy, supra n. 11, at 106 (describing Norwegian and Danish implementation).

Moreover, there is nothing in the Directive to suggest that the ‘appropriatemeasures’ called for by Article 6(4) might not include immunity from liability afterthe right holder had failed to make available the means of benefiting from an excep-tion or limitation. See id. at 108–109 (noting the Directive's preference for voluntaryarrangements by right holders, but suggesting that the broad language of ‘appropri-ate measures’ leaves much room for member states to adopt different approaches); cf.Christophe Geiger, ‘The New French Law on Copyright and Neighbouring Rights of1 August 2006 – An Adaptation to the Needs of the Information Society?’, 38 IIC401, 421–23 (2007) (noting the dangers of deferring entirely to right holder arrange-ments and arguing that ‘the only measure that would truly have been “appropriate”within the meaning of Article 6(4)’ would have been a prohibition on right holdersapplying TPM to deprive the public of the benefit of exceptions with a ‘pronouncedsocial function’).

traditional copyright law.299 Concern about that prospect found expression inArt. 6(4).300 The first paragraph of Art. 6(4) provides that:

Notwithstanding [the prohibitions against acts of circumvention and circumventiondevices], in the absence of voluntary measures taken by right holders, includingagreements between right holders and other parties concerned, member states shalltake appropriate measures to ensure that right holders make available to the benefi-ciary of an exception or limitation provided for in national law in accordance with[various articles in the Directive listing permissible exceptions to copyright, such ascopyright in connection with teaching], the means of benefiting from that exceptionor limitation . . . . [where that beneficiary has legal access to the work].301

The Directive thus seems to take the position that a technological adaptation,namely, the application of TPMs, should not alter the balance that existedunder default rules of copyright law with respect to the enjoyment of excep-tions and limitations.302 We call this principle ‘prescriptive parallelism,’ toconvey the notion that the traditional copyright balance of rights and excep-tions should be preserved in the digital environment.303

Article 6(4) is only one dimension of parallelism in the EU Directive. Italso contains a provision that anticipates a reduction in private copying leviesunder national copyright laws, potentially to zero, where copyright ownershave applied TPMs to works and thus secured by technology what theyformerly obtained through legally sanctioned levy schemes.304 Copyright


299 See Lionel Bently and Brad Sherman, Intellectual Property Law 309–11 (2ndedn 2004) (noting fears expressed).

300 See Bernt Hugenholtz (2000), ‘Why the Copyright Directive is Unimportant,and Possibly Invalid’, 22 Eur. Intell. Prop. Rev. 501 (describing Art. 6(4) as ‘a provi-sion that is presumably intended to reconcile the interests of right owners employingtechnical protection measures with the interests of users wishing to benefit from copy-right limitations’); Bently and Sherman, supra n. 299, at 310 (‘As regards the relation-ship between the technological measures and exceptions to copyright, article 6(4) ofthe [Copyright Directive] provides for a strange, barely comprehensible, compro-mise.’).

301 See Copyright Directive, Art. 6(4).302 Article 5(3)(o) also permits member states to create exceptions or limitations

to rights provided for in Arts. 2 and 3 ‘in certain other cases of minor importance whereexceptions or limitations already exist under national law, provided that they onlyconcern analogue uses . . . .’ Copyright Directive, Art. 5(3)(o).

303 Compare similar concept expressed in Agreed Statements, supra n. 2, state-ment concerning Art. 10.

304 Article 5(2)(b) of the Copyright Directive permits member states to createexceptions or limitations to the reproduction right ‘in respect of reproductions on anymedium made by a natural person for private use . . . on condition that the right hold-ers receive fair compensation which takes account of the application or non-applicationof technological measures referred to in Article 6 to the work for subject matterconcerned.’ Copyright Directive, Art. 5(2)(b).

owners should not be able to double dip, and should receive the same level ofeffective protection, whether through law or technology.

We do not want to overstate the principle of prescriptive parallelism under-lying the EU Directive. Article 6(4) is a means by which the EU sought toensure that the balance of copyright law was maintained after the applicationof technological protection measures.305 But that goal is pursued against thebroader backdrop of a Directive that contemplates adjustments to the legalrights of both copyright owners and users to reflect the availability and appli-cation of such measures. For example, one of the principal objectives of theEU Directive was to provide legal protection against circumvention of tech-nological protection measures, which might be conceived as enhanced legalprotection for copyright owners in light of enhanced copying capacity.306

Moreover, the prescriptive parallelism of Art. 6(4) must also be viewedagainst the treatment of exceptions by the EU Directive generally. Althoughthe stated objective of the Directive was in part to harmonize the disparate setsof exceptions and limitations available under national copyright laws in theEU, the Directive effected only a very modest amount of harmonization, atleast in the short run.307 Its broad list of exceptions is largely permissive,308

although there is a mandatory exception for ephemeral copies,309 and there isa restriction on adoption of further exceptions.310


305 See Hugenholtz, supra n. 300, at 501.306 See Copyright Directive, supra n. 10, Art. 6(1)–(2). During the legislative

debates, the Commission apparently suggested that all exceptions listed in Article 5should explicitly prevail over contrary TPMs, and Article 6(4) was the compromiseprovision that reconciled the Commission’s position with that adopted by the Councilof Ministers (which was more supportive of right holders’ freedom to use TPMs). SeeCopyright Directive Implementation Study, supra n. 11, at 104.

307 See generally Copyright Directive Implementation Study, supra n. 11; seealso Inst. for Info. Law, Univ. of Amsterdam, The Recasting of Copyright and RelatedRights for the Knowledge Economy (2006). These studies were commissioned by theEuropean Commission’s Internal Market Directorate-General.

308 See Copyright Directive, Art. 5(2)–(3) (providing that member states mayprovide for certain exceptions or limitations); see also Hugenholtz, supra n. 300.

309 See Copyright Directive, at Art. 5(1). The Directive states:

[T]emporary acts of reproduction . . . which are transient or incidental and an inte-gral and essential part of the technological process and whose sole purpose is toenable a transmission in the network between third parties by an intermediary, or alawful use, of a work or other subject matter to be made, and which have no inde-pendent economic significance, shall be exempted from the reproduction right.

Id.310 See id. at recital 32. But see id., Art. 5(3)(o) (quoted supra n. 285). It might

be that over time the mere listing of permissible exceptions will cause a convergenceas different national legislators begin to work from the same turnkey list, secure in the

More importantly for purposes of this chapter, the failure to mandate theadoption of a wide range of exceptions undermines the effectiveness of Art. 6(4)in achieving its general goal of prescriptive parallelism. Article 6(4) only guar-antees that technological protection measures should not impede the ability ofthird parties to take advantage of exceptions or limitations if they are providedin national law.311 Furthermore, there are a number of other significant textualconstraints on the potential effectiveness of Art. 6(4), including its limitation toseven defined exceptions rather than all exceptions or limitations existing innational law,312 its inapplicability to works made available on-demand,313 and


knowledge that adopting such exceptions will not meet with the objections of theEuropean Commission.

311 See id. at Art. 6(4).312 These include exceptions for copying by libraries and educational institutions,

copying for the benefit of persons with a disability, and copying for the purpose ofscientific research. There is no coherent explanation, other than raw political compro-mise, for the inclusion of these exceptions but not others in Art. 6(4). See CopyrightDirective Implementation Study, supra n. 11, at 110 (‘Because this provision was nego-tiated in the last hours before adoption of the final text of the Directive, there is nopublic record available to shed light on the legislator’s intent. As a result, the list oflimitations included in Article 6(4) appears highly arbitrary.’). Indeed, the arbitrarinessof the list may simply reflect the broader failure of the Directive to rationalize treat-ment of exceptions generally. See id.

Moreover, Art. 6(4) does not, for example, include uses that users are entitled tomake because a work is in the public domain or because all that is taken is otherwiseunprotected by copyright law. It can be argued that the protections of Art. 6 do notapply to public domain material in the first place because right holders are not in a posi-tion to authorize uses of such works. As a result, some national legislatures have takenthe position that TPMs on public domain works can be circumvented without liability.See Urheberrechtsgesetz [Copyright Act], 12 September 2003, BGBl. I at 1774, Art. 1,§95(a)(2) (F.R.G.). Of course, in practical terms, if right holders package publicdomain works with some protected works, it is unclear whether this interpretation willbe sufficient to save access to such works without more affirmative legislative state-ment. See Bently and Sherman, supra n. 299, at 309.

313 The mechanisms of Art. 6(4) do not apply where the work is made availableon an on-demand basis because the provision is inapplicable where ‘the work or othersubject matter is made available to the public on agreed contractual terms in such a waythat members of the public may access them from a place and at the time individuallychosen by them.’ The language of this sentence in the directive itself makes the scopeof the limitation uncertain and could be tested in a number of ways. See Bently andSherman, supra n. 299, at 311 n. 132 (noting room for dispute regarding the phrase‘agreed contractual terms’); see also Copyright Directive Implementation Study, supran. 11, at 112 (suggesting that confining this limit on Art. 6(4) to negotiated contractswould be consistent with the legislative purpose).

More importantly, the on-demand language surely cannot be read in ways that renderthe general provision meaningless. See Maciej Barczewski (2005), ‘InternationalFramework for Legal Protection of Digital Rights Management Systems’, 27 Eur.Intell. Prop. Rev. 165, 167 (noting that reading the ‘available contractually on-demand’

its unclear relationship with the anti-circumvention and interoperability provi-sions in the Software Directive.314

These limitations in the text of the Directive have caused many scholars todoubt the capacity of the provision to achieve its declared objectives.315 In defer-ence to ordinary canons of interpretation, we are reluctant to read the limits inArt. 6(4) in ways that render the general provision meaningless.316 However,rather than focus on the details of the limitations of Art. 6(4) as enacted, andperhaps looking forward to the possible revision of the Directive to take intoaccount a recent report commissioned from the University of AmsterdamInstitute for Information Law,317 we will view the conceptual mechanism of Art.6(4) as a means of ensuring continued viability of privileged uses notwithstand-ing the application of technological protection measures. More particularly, wewill consider the reverse notice and takedown proposal as a vehicle for imple-menting Art. 6(4) and exploring its possible reform.

Reverse Notice and Takedown as a Mode of Implementing Article 6(4)

The reverse notice and takedown proposal articulated in ‘Setting the stage fora reverse notice and takedown regime’ at p. 255, essentially consists of two


limits in Art. 6(4) in ways that allowed digital lock-up of all works available onlinewould conflict with the directive’s aims); see also infra text accompanying n. 306. Thesame interpretive rationale surely should be applied to yet another limit on Art. 6(4),namely, that because the provision only applies where the beneficiary has legal accessto a work, it is arguably ineffective against access control measures. See SeverineDusollier (2003), ‘Fair Use by Design in the European Copyright Directive of 2001’,Comm. of the ACM, April 2003, at 51, 53–54 (2003) [hereinafter Fair Use by Design];Dusollier, supra n. 11.

314 Council Directive 91/250/EEC, 1991 O.J. (L 122) 42 (EC) [hereinafterSoftware Directive]. The anti-circumvention provisions and interoperability exceptionsin the Software Directive appear to survive the adoption of Art. 6. See CopyrightDirective, supra n. 10, recital 50; see also Software Directive, supra, Art. 7(1)(c);Bently and Sherman, supra n. 299, at 311–312 (discussing UK implementation andnoting different treatment of software).

315 See Hugenholtz, supra n. 300; Dusollier, Fair Use by Design, supra n. 313.316 See Thomas Rieber-Mohn (2006), Harmonising Anti-Circumvention

Protection with Copyright Law: The Evolution from WCT to the Norwegian Anti-Circumvention Provisions, 37 IIC 182, 188 (offering an interpretation of whichcontractual arrangements by right holders would pre-empt member state interventionby reference to the need to give Art. 6(4) some meaning); Barczewski, supra n. 313, at167.

317 See Copyright Directive Implementation Study, supra n. 11. That reportconcluded that ‘the principle underlying article 6(4) . . . is worth maintaining’ butrecommended that the provision be simplified and clarified in a number of ways thatensure its effectuation. See Copyright Directive Implementation Study, supra n. 11, at116.

parts. First, implicitly, all uses privileged under traditional copyright principlesshould continue to be privileged in an era of digital rights management. Theapplication of TPMs should not alter the balance of rights between copyrightowners and users.318 This is a substantive principle, which might be followedwith different modifications in different countries.319

Secondly, in order to effectuate this substantive principle, users need a mech-anism by which to vindicate their rights and to secure the certainty required toengage in creative activity privileged under traditional copyright principles.Different institutional or procedural means through which to pursue this objec-tive are possible,320 but we believe the reverse notice and takedown procedureaffords a number of distinct advantages, many of which were canvassed in‘Setting the stage for a reverse notice and takedown regime’ at p. 255.

As an initial matter, we believe the proposed reverse notice and takedownprocedure should be considered as a means of implementing member stateobligations under Art. 6(4). This proposal should be studied by countriescommitted to compliance with the EU regime, which includes not only themember states of the EU, but also countries that commit to such a regime(whether in general terms or in detail) in bilateral trade negotiations.321 Even


318 See e.g., Paolo Spada, Copia privata ed opera sotto chiave [‘Private Copiesand Locked Down Works’], 2002(1) Rivista Di Diritto Industriale 591, 597–598 (stat-ing that the system of technological protection measures provided authors by the ECDirective must acknowledge the exceptions to authors’ rights, including privilegeduses, because ‘these are an integral part of the authors’ rights system and not merelycontingencies of contract or the owners’ brute force’) (trans. JHR).

319 Even within the traditional copyright system, exceptions are quite differentfrom one country to the next. How each country might want to approach the digitalenvironment is unlikely to be more uniform.

320 For example, Professor Spada believes that the Directive entitles privilegedusers disadvantaged by TPMs to assert their rights under the Directive in nationalcourts. See Spada, supra n. 318, at 598.

321 Compliance with EU law is an obligation not only of all European Unionmember states, but also of member states of the European Free Trade Area (EFTA), aswell as a number of countries pursuing future European Union membership or enteringinto bilateral trade agreements with the European Union. See Maximiliano Santa Cruz(2007), ‘Intellectual Property Provisions in European Union Trade Agreements:Implications for Developing Countries’, Int’l Centre for Trade and SustainableDevelopment 2–3. In the past, the bilateral trade agreements negotiated by the EU havecontained obligations with respect to intellectual property stated at a very general level,such as compliance with the WIPO Copyright Treaty. See id. at 10. In contrast, theUnited States has in its bilateral trade agreements sought to secure compliance withmore detailed standards that resemble the language of the DMCA rather than the termsof the WCT. See Chander, supra n. 18, at 206. However, some observers have detecteda shift in the EU approach toward the more aggressive US approach in more recentnegotiations. See Santa Cruz, supra, at ix–x, 18.

if certain limits apparently embodied in Art. 6(4) turn out to circumscribe itsactual scope in EU member states,322 member state implementation of anarrower provision (for example, with respect only to certain exceptions)might still afford insights as to how the basic structure of the proposed reversenotice and takedown procedure could be enhanced to better ensure that anti-circumvention provisions are consistent with privileged uses.

Moreover, such an exercise might also highlight the ways in which Art.6(4) could itself be broadened as EU legislators consider a revision of theDirective in light of the recent report by the Institute for Information Law atthe University of Amsterdam.323

Application of Reverse Notice and Takedown under Article 6(4)

Under Art. 6(4), right holders are required to ensure that beneficiaries ofexceptions have the ability to exercise those exceptions notwithstanding theapplication of technological protection measures to copyrighted works.324 Ifright holders do not voluntarily ensure that result, member states are obligedto devise a mechanism to compel it.325

Member states have implemented this obligation in a number of differentways.326 Each of the different forms of implementation offers a model forpreserving privileged uses; yet, most are deficient and would benefit from areverse notice and takedown procedure.327

Triggering an entitlement to reliefThe reverse notice and takedown procedure would be available to anyparticular user who wished to engage in a privileged use with respect toeven a single work. Thus, the threshold would be substantially lower thanthe ‘adverse effect on classes of work’ standard found in the rulemakingauthorization contained in the DMCA, even as refined under the 2006 rule-


322 See supra text accompanying nn. 311–314.323 See Copyright Directive Implementation Study, supra n. 11, at 132–33 (criti-

cizing limits of Art. 6(4)).324 See Copyright Directive, supra n. 10, Art. 6(4).325 See id.326 See generally Westkamp, supra n. 296; see also Copyright Directive

Implementation Study, supra n. 11, at 132 (‘In some member states, only individualbeneficiaries may claim the application of the limitation, while in other countries, inter-est groups and third parties also have the right to do so. In yet other member states,administrative bodies may be entitled to force right holders to make the necessarymeans available to beneficiaries of limitations.’).

327 Of course, much of the blame can be laid at the door of the Directive itself.See Copyright Directive Implementation Study, supra n. 11, at 132–33.

making.328 But this more generous approach is fully consistent with Art. 6(4),which would appear to allow analysis of particular uses of particular works byparticular users.329

One could argue that the unavailability of a single work to be put to a singleuse might be deemed insufficiently substantial a cost to justify the mechanismscontemplated by Art. 6(4). But this calculus depends in part upon the nature ofthe mechanism and upon what is contemplated by the member state as an‘appropriate measure’ in response to any given inability to exercise an excep-tion granted by copyright law. If the procedure were speedy, and if ‘appropri-ate measure’ meant one that permits a single circumvention, then there wouldbe virtually no real cost to a state acting on the basis of a lower trigger thresh-old.330

Because the reverse notice and takedown procedure contemplates thepossibility of relief in the form of a limited exemption for a particular user, itwould seem perfectly appropriate that the obligation of member states shouldarise more easily than if broader relief were sought. As the recent refinementby the Librarian of Congress of the notion of ‘classes of works’ reflects,331 thesub-categories of privileged uses that emerge from a matrix of affected works,from groups of users, and from a range of uses, are substantial and disparate.Not only must different forms of relief be available, but also different levels ofneed to actuate permitted uses should trigger such relief.

The fact that relief under the reverse notice and takedown procedure mightbe appropriate even with respect to a single use of a single work should notpreclude the possibility of using the procedure where technological protectionmeasures are having a more pervasive effect. Arguably, the relief availableunder any state-imposed mechanism should reflect the degree and type of harmcaused by the application of technological protection measures. Thus, memberstates may need to create more intrusive or structural relief for third-party usersor competitors if lawful uses of entire classes of works are being impeded.332

While this type of analysis parallels that conducted by the Register ofCopyrights in the triennial rulemaking to some extent, the reverse notice and


328 See Exemption to Prohibition on Circumvention of Copyright ProtectionSystems for Access Control Technologies, 71 Fed. Reg. 68472 (27 November 2006) (tobe codified at 37 C.F.R. §201) [hereinafter 2006 Rulemaking], at 6–7.

329 See Copyright Directive, Art. 6(4) (incorporating by reference exceptions inArt. 5 that involve particular uses for particular purposes including, for example, copy-ing for the purpose of scientific research).

330 See Symposium, ‘The Law & Technology of Digital Rights Management’, 18Berkeley Tech. L.J. 697, 760, 765 (2003) (remarks of Graeme B. Dinwoodie onAnticircumvention Regulations in the United States and Elsewhere).

331 See 2006 Rulemaking, supra n. 328.332 See Symposium, supra n. 330, at 765–66 (remarks of Dinwoodie).

takedown procedure might remedy some of the deficiencies of that procedure.In particular, despite refinement in the 2006 rulemaking of the notion ofadverse classes, the Register remains limited in the relief that she can offer,namely, the grant of a temporary exemption to a specified category of worksfrom the application of s. 1201.333 And that relief does not immunize thirdparties who, through the distribution of devices, assist in ensuring that privi-leged uses are made. Moreover, the process occurs only every three years.334

Implementation of Art. 6(4) in the UK includes the possibility that thecomplaint of obstruction to the exercise of privileged uses can be made onbehalf of a class of users.335 This type of claim should be a component of thereverse notice and takedown procedure. It would provide a useful, more flex-ible, and more dynamic complement to the rulemaking procedure.336

Encouraging the proper role for voluntary arrangementsWe believe that the reverse notice and takedown proposal should be availableto users and competitors even if copyright owners voluntarily make worksavailable by overriding TPMs to some extent. In this respect, the proposalmight appear to depart from the strict text of the EU Directive. Under theDirective, the obligation upon member states arises ‘in the absence of volun-tary measures taken by right holders, including agreements between rightholders and other parties concerned.’337 However, even though the provisioncontemplates some room for right holders to forestall legal interventionthrough voluntary arrangements such as contract, this freedom cannot be


333 See supra text accompanying n. 137.334 See supra text accompanying n. 136.335 See Copyright and Related Rights Regulations, 2003, SI 2003/2498, Art. 24,

§ 296ZE(2) (UK), available at http://www.opsi.gov.uk/si/si2003/20032498.htm(‘person being a representative of a class of persons prevented from carrying out apermitted act’); see also Unterlassungsklagengesetz [UklaG, Injunctions Act], 27August 2002, BGBl. I at 3422, as amended by Urheberrechtsgesetz [Copyright Act], 10September 2003, BGBl. I at 1774, Art. 3, § 3a (FRG).

336 If the request could not be made on behalf of a class of users, there might arisethe problem whether similarly situated third parties could rely on responses of copy-right owners to a request from a user under the reverse notice and takedown procedure.To the extent that the request invokes a ‘purpose exception’, it is unlikely that copy-right owners would make distinctions between users and thus as a practical matter simi-larly situated third parties could rely on relief granted by copyright owners. To theextent that copyright owners did make distinctions for improper reasons, occasion mayarise to invoke Dan Burk’s proposed anti-circumvention misuse doctrine. See Burk,supra n. 135. With respect to ‘identity’ exceptions, persons falling within the group ofbeneficiaries entitled to exercise the exception should be able to take advantage (thatis, treat as ‘precedential’) relief granted to others possessing the same identity.

337 Copyright Directive, supra n. 10, Art. 6(4).

unlimited without rendering Art. 6(4) meaningless.338 In any event, we do notbelieve that right holders have, in fact, undertaken such voluntary measuresthus far, which is why a reverse notice and takedown regime is sorely needed.

The very availability of the reverse notice and takedown procedure may, infact, facilitate licensing on reasonable terms and conditions and induce othervoluntary measures to ensure that exceptions can be exercised; voluntarymeasures that adequately preserved the ability to exercise those exceptionswould obviate the need for member states to take further action against rightholders. Whether acting in advance of the threat of later sanctions (under thegeneral language of Art. 6(4)), or under contemporaneous threat (in the caseof the reverse notice and takedown procedure implementing that provision),the shadow of legal compulsion might foster private ordering that is morebalanced in nature.339

The only type of ‘voluntary measure’ expressly referenced in Art. 6(4) is‘agreements between right holders and other parties concerned’.340 However,reaching consensus among the vast range of interests now implicated by copy-right law may be quite difficult. The process of legislating copyright law,which often approximates a contractual negotiation, has become tortuous andslow. It is unlikely that agreements between copyright owners and users overtaking down TPMs will be easy to achieve.

Because many exceptions depend on the type of use, rather than the cate-gory of user (i.e., purpose exceptions, not identity exceptions), it may notsuffice merely to identify the relevant beneficiaries with whom to negotiate. Ifthe obvious categories of users are singled out as beneficiaries, focusing onidentity exceptions, it will privilege traditional ‘fair use communities,’341

which may constrain important sources of creativity. Consensus among collec-tives often ignores the needs of single users or users within very loosely orga-nized communities, and the reverse notice and takedown proposal willaccommodate these potentially important creators.

Agreements are not the only form of voluntary measure through whichright holders might forestall the intervention of member states. For example,right holders might apply TPMs in ways that permit privileged uses. Althoughthis outcome might seem ideal in theory, such an approach carries with it tech-nological limitations. Implementing such fact-specific exceptions as the fair


338 See Rieber-Mohn, supra n. 299, at 188 (arguing that voluntary measures byright holders must be ‘appropriate’ in order to avoid member state intervention andmust occur within a reasonable period of time).

339 Some private ordering has clearly occurred in the shadow of Art. 6(4). SeeCopyright Directive Implementation Study, supra n. 11, at 107.

340 See id.341 See also Ginsburg, supra n. 14.

use doctrine or other privileged uses in computer code will prove immenselydifficult.342 Thus, this cannot be the sole mechanism through which to ensureprivileged uses.

Moreover, such arrangements raise broader normative concerns. Relyingon copyright owners accurately to map technology to legal rules delegatesimmense power to those owners both in the interpretation of the default rulesand in assessing the adequacy of the technology used to guarantee permitteduses.343 Even if the copyright owners accurately interpreted and implementedexisting permitted uses, technological features would remain inherently back-ward-looking.344 One of the advantages claimed for the fair use doctrine is itscapacity to adapt efficiently to reflect new technological conditions.345

The European Commission viewed legislative intervention as a backgroundthreat to provide incentives for voluntary arrangements with copyrightowners. Even so, the reverse notice and takedown approach – immediatelyguaranteeing the right to demand the exercise of privileged uses, regardless ofvoluntary arrangements – may be preferable. The desired end is the same:


342 See Nic Garnett, ‘Automated Rights Management Systems and CopyrightLimitations and Exceptions’, WIPO Doc. No. SCCR/14/5 (27 April 2006), available athttp://www.wipo.int/edocs/mdocs/sccr/en/sccr_14/sccr_14_5.doc.

343 See Eduardo M. Penalver and Sonia Katyal, Property Outlaws (Fordham LawLegal Studies Research Paper No. 90, April 2007), available at http://ssrn.com/-abstract=745324 (discussing ‘anti-delegation’ architecture of copyright law). To theextent that we wish to rely on the incorporation of privileged uses in the architecture ofthe technological protection measures, it might be important to enlist the support of unfaircompetition or consumer protection law in requiring the disclosure by copyright ownersof the precise nature and extent of technological protection measures. This objective hasbeen secured in a number of European countries, in part through DRM-specific legisla-tion (e.g., Germany), Urheberrechtsgesetz [Copyright Act], 12 September 2003, BGBl. Iat 1774, Art. 1, § 95(d) (F.R.G.), and in part through litigation under general principlesof consumer protection (e.g., in France). See Association CLCV / EMI Music France,Tribunal de grande instance [TGI] [ordinary court of original jurisdiction] Nanterre, 6ech., 24 June 2003 (Fr.), available at http://www.legalis.net/jurisprudence-decision.php3?-id_article=34 (fining Sony for failing to disclose TPM). As a result, market forces mayplay a greater role in ensuring that copyright owners do not abuse the application of tech-nological protection measures in the first place. See also Nika Aldrich, A System of Logo-Based Disclosure of DRM on Download Products (29 April 2007), available athttp://www.ssrn.com/ abstract=983551.

344 Of course, the same may be true of agreements reached between copyrightowners and users. Thus, any voluntary agreement that is concluded ideally should gobeyond the articulation of present substantive rules and contemplate procedural orinstitutional components that facilitate attention to the spontaneity and dynamism ofthe ways in which users might wish to engage with copyrighted works.

345 See H.R. Rep. No. 94-1476, at 66 (1976); see also Pamela Samuelson (1993),‘Fair Use For Computer Programs and Other Copyrightable Works in Digital Form:The Implications of Sony, Galoob and Sega’, 1 J. Intell. Prop. L. 49.

encouraging private parties to make arrangements that allow valuable andprivileged uses.

Ensuring an Effective Ability to Engage in Privileged Uses

One of the principal points of contention in implementing the WCT has beenwhether national legislation should prohibit both acts of circumvention anddevices designed to facilitate circumvention. Creating exceptions to a prohibi-tion on circumventing technological protection measures may be effectivelymeaningless if third parties with the technological capacity to engage incircumvention are not able to provide privileged users with circumventiontools.

Article 6(4) requires member states to ensure that right holders make avail-able to the beneficiary of an exception or limitation the means of benefitingfrom that exception or limitation. This may impose a more affirmative oblig-ation on member states to ensure that circumvention tools are available tosome degree. Certainly, the forms of relief contemplated by Commission offi-cials under the provision include quite affirmative steps, such as the distribu-tion of the ‘unlocking keys’ necessary to circumvent the technologicalprotection measures.346

If the reverse notice and takedown procedure is to ensure the possibility ofprivileged uses notwithstanding the application of TPMs, the procedure mightoffer standing to providers of circumvention tools. Alternatively, third-partyservice providers might be afforded the right to take advantage of the reliefsecured by individual users under the procedure. Earlier in this chapter, wethus suggested that courts ‘allow those providing needed decryption skills andtechnologies to benefit from the same privileged use exception that a deman-deur had ultimately vindicated either in court or by silent acquiescence of thecopyright owner.’347

Copyright law does not typically permit a third party to defend the legalityof their activities on the basis that it is facilitating the exercise of privilegeduses by another party (outside the context of secondary liability).348 Yet,


346 See Dusollier, Fair Use by Design, Nora Braun (2003), ‘The InterfaceBetween the Protection of Technological Protection Measures and the Exercise ofExceptions to Copyright and Related Rights: Comparing the Situation in the UnitedStates and the European Community’, 25 Eur. Intell. Prop. Rev. 496, 502.

347 See supra text accompanying n. 275.348 See Princeton Univ. Press v Mich. Document Serv., 99 F.3d 1381, 1391 (6th

Cir. 1996), cert. denied, 520 US 1156 (1997) (quoting William Patry, Fair Use inCopyright Law 420 n. 34 (1996)) (arguing that ‘the courts have . . . properly rejectedattempts by for-profit users to stand in the shoes of their customers making nonprofitor noncommercial uses’). The historical weakness of prohibiting commercially

absent the involvement of such third parties, the rights secured by the reversenotice and takedown procedure may effectively become worthless.349 In thiscontext, the proposal thus derogates from parallelism with traditional copy-right law, but it does so because the technological realities are different. Acommercial copy shop might have improved the efficiency of professorsproducing course packs or students making personal copies, but the copyingcould have occurred without their help.350 The same is not true of technolog-ical circumvention (otherwise there really would be some doubt about whetherthe measures were ‘effective’).

Developing appropriate forms of reliefOf course, one can avoid this debate entirely, at least within the structure ofArt. 6(4), by noting that this question is closely tied to the question of relief.To the extent that the relief provided is more structural in nature, such asrequiring the modification of the TPMs or the distribution of the work inunprotected format, procedural devices such as expanded standing or third-party beneficiary rules would be unnecessary. Such ‘structural’ relief doesappear consistent with the type of approach contemplated by Commissionofficials under Art. 6(4), when they suggested that the relief might include the‘distribution of unlocking keys.’351


oriented third parties from claiming third-party beneficiary status with respect to theassertion of privileged uses forced the British House of Lords, in a leading case involv-ing control of the spare parts market, to adapt a doctrine based in property law thatimposed restrictions on the initial seller of the property, rather than find a right personalto the user of the property. Thus, in British Leyland Motor Co. v Armstrong Patents[1986] 1 All ER 850 (HL) (UK), the Court held that the owner of copyright in the draw-ings of an exhaust pipe of a car could not enforce that copyright so as to prevent thesale of unauthorized spare parts because to do so would derogate from the grant of theproperty right in the car.

This doctrine, though short-lived in UK copyright law because statutory revisionsquickly addressed the specific problem of spare parts and rights in the designs of usefularticles, highlights the importance of limiting the rights of the right holder rather thanconferring personal rights only on individual users. Cf. Canon Kabushiki Kaisha vGreen Cartridge Co., [1997] AC 728 (PC) (appeal taken from HK) (per curiam opin-ion by Lord Hoffman); Mars UK v Tecknowledge Ltd [2000] FSR 138 (Ch.) (UK)(opinion of Jacob LJ) (noting effect of demise of the British Leyland principle underUK law).

349 See Copyright Directive Implementation Study, supra n. 11, at 133.350 See Princeton Univ. Press v Mich. Document Serv., 99 F.3d 1381 (6th Cir.

1996), cert. denied, 520 US 1156 (1997).351 See Jorge Reinbothe, ‘The Legal Framework for Digital Rights Management’,

Digital Rights Management Workshop, Brussels, 28 February 2002, at 2, available athttp://ec.europa.eu/information_society/eeurope/2005/all_about/digital_rights_man/doc/workshop2002/drm_workshop_brx_rev.doc.

Focusing on the nature of relief available under the reverse notice and take-down procedure might be a cleaner approach than innovating with proceduraldevices. At p. 255, we suggested that copyright owners receiving the reversenotice and takedown request would either have the responsibility to take downthe TPMs that impeded privileged uses or the obligation to contest the use onlegally actionable grounds.352 Compliance with such a request would, ofcourse, effectively grant structural relief, albeit without judicial or administra-tive intervention. A failure to comply with the reverse notice and takedownrequest could then provide a user group with standing to seek the right tocircumvent for the purposes of specified non-infringing uses.

If the user group was successful, the ability of similarly situated thirdparties to take advantage of the court’s decision would depend upon the natureof the relief granted. In countries that recognize the doctrine of collateralestoppel, third parties could clearly rely on the court’s determination as towhether the use in question was privileged. However, spreading the full bene-fits of the court’s ruling might depend upon whether the court simply permit-ted the requesting party to circumvent, permitted the user group to employ aprovider of circumvention services to unlock the TPM, or ordered the copy-right owner to modify the TPM.353

The significance of the nature of the relief granted in this regard becomesclearer when one examines the deficiencies in one member state’s implemen-tation of Art. 6(4). Under the provisions implementing Art. 6(4) in the UK,users who are unable to engage in a privileged use due to the application ofTPMs may petition the Secretary of State.354 The Secretary of State canrequire the copyright owner to demonstrate a ‘voluntary measure or agree-ment’ or face ‘directions’ that enable the relevant beneficiary to take advantageof the copyright exemption.355 If the copyright owner fails to follow thosedirections, it will be found in breach of a duty actionable by the user thatcomplained.356

This procedure suffers from several deficiencies. In particular, it requires anapplication to the Secretary of State every time a user believes its right toengage in a privileged use is being impeded.357 The reverse notice and take-


352 See supra ‘The basic concept’ at p. 274.353 It might also depend upon any conditions that the court placed on the exercise

of the rights granted to the user. See supra text accompanying nn. 266–267.354 Copyright and Related Rights Regulations, 2003, SI 2003/2498, Art. 24, §§

296ZD(2), 296(2) (UK).355 See id. at § 296ZE(3).356 See id. at § 296ZE(6).357 Other national laws employ different institutions to determine the claims of

the users. For example, under Greek law, the matter is referred to mediators and, absentconsent to the mediators’ conclusion, to the Court of Appeal. But these institutions are

down procedure may also suffer from a similar problem if applications mustbe made on a case-by-case approach and the relief contemplated simply autho-rizes a particular user to circumvent a particular technological protectionmeasure and no more. However, this direct approach should prove muchsimpler than a formal referral to an administrative body, and practice under theproposal – as supplemented by judicial decisions, when necessary – shouldfacilitate reliance on the mechanism over time, especially in common lawjurisdictions.

If the ‘directions’ from the Secretary of State required the copyright ownerto modify the TPM, as a Recital of the Directive hints, one form of ‘appropri-ate measure’ might be one that would have an across-the-board effect.358 If therelief that a user could request under the reverse notice and takedown proce-dure could likewise take this form, a similar erga omnes effect could beachieved.359

The possibility of structural relief is important in ameliorating anotherweakness of the UK procedure (which might also, to some extent, belevelled at the reverse notice and takedown proposal). Requiring applicationby the beneficiary of the exemption fails to give adequate weight to thoseinstances where creative acts covered by a privileged use are spontaneous innature.360 Copyright exemptions traditionally operated on the premise that the


still assessing whether a technological protection measure is impeding any particularprivileged use, not whether an act of circumvention (or a device) will ex post beexcused from liability because of that fact. See Law 3057/2002 (Official GazetteA/239/10 October 2002), Art. 81, Implementation of the Directive 2001/29/EC of theEuropean Parliament and of the Council of 22 May 2001 on the Harmonization ofCertain Aspects of Copyright and Related Rights in the Information Society and OtherProvisions, available at http://portal.unesco.org/culture/en/file_download.php/3368a2bd0fffab9a5310a8e00abfb926Greek_law+.pdf (Greece). See generallyCopyright Directive Implementation Study, supra n. 11, at 67–68 (summarizing insti-tutional choices made).

358 See Copyright Directive, recital 51 (providing example of ‘modifying animplemented technological measure’).

359 The recital expressly mentions ‘other means’ of ensuring the ability to engagein privileged uses. One of the responsible Commission officials suggested at the timethe Directive was adopted that these means might include ‘handing out locking keys’.See Reinbothe, supra n. 351, at 2. Certainly, the language of ‘right holders makingavailable to the beneficiary’ seems to suggest affirmative conduct, beyond merelyenacting an exemption to allow the beneficiary to engage in an act of circumvention(though that would also be a possible measure).

360 Requiring an application to a government official in order to engage in creativeactivity also devalues the importance of privacy or anonymity as an aspect of the creativeenvironment. See supra n. 290 (admitting this defect). In the notice and takedown proce-dure established by s. 512, the copyrighted works at issue are created prior to the joiningof dispute. Thus, the procedure does not interfere with the spontaneity of creative acts, orthe potential importance of anonymity in the creative process.

user would engage in the contested act and the legitimacy of that act wouldlater be determined by application of the allegedly relevant exemption, a prac-tice whose risks might also inhibit actual resort to spontaneous uses. Thedeparture from this traditional assumption is in part simply a product of theapplication of TPMs, which of themselves establish an inverted default of ‘askfirst, act later’. Nevertheless, requiring individualized applications in order toengage in privileged uses does not help.

Here again, if structural relief could be requested by a user seeking toengage in privileged uses, the costs of such a procedure and the repressiveeffect of having to seek permission would more often become a one-timeoccurrence. This supports the suggestion above that the reverse notice andtakedown procedure should permit the demandeur to seek broader relief thanmerely obtaining immunity to circumvent.

While such structural relief as requiring the modification or elimination oftechnological protection measures may, at first blush, seem quite radical, it isfully consistent with Art. 6(4), which contemplates that copyright owners havean affirmative role to play in ensuring the preservation of the balance of rightsbetween owners and users of works.361 To be sure, the relief that would besecured through the mechanisms implementing Art. 6(4) is not detailed in theDirective, and some commentators have argued that it cannot require the copy-right owner to reveal the digital lock.362 But a per se rule foreclosing suchrelief is inconsistent with the open-ended nature of the Directive, and indeedwith statements by Commission officials after its adoption.363

Whether such relief could undermine the efforts of copyright owners toprotect against even infringing uses364 would depend upon the terms underwhich such disclosure was made. For example, if a handover of the digital lockwere conditioned on the manner in which the information was used ordisclosed, it might enable the privileged uses without undermining the copy-right owner’s legitimate rights to protect against infringement. This possibil-


361 See Copyright Directive Implementation Study, supra n. 11, at 68–69 (notingaffirmative nature of obligations).

362 See Braun, supra n. 346, at 502 (arguing that ‘handing over the ‘key’ tocircumvent the technological measure to users is inappropriate and would endanger thewhole system of technological measures’).

363 See Reinbothe, supra n. 351, at 2; Bently and Sherman, supra n. 299, at 311.364 Some might argue that our entire proposal will cause more infringement. But

every time you legitimate any dual-use technology, there is a risk of infringement. Onthe other hand, if you lock up all works in technological fences, there is a risk of fewerpublic interest uses. For the reasons explained in ‘Checks and balances in the ISP safeharbours and anti-circumvention rules’ at p. 234, we think that the balance betweenthese two risks needs to be better calibrated, and can be done so without jeopardizingthe ability to enforce copyrights effectively against bad actors.

ity should make the reverse notice and takedown procedure attractive to indus-try. To the extent that the information is disclosed to third parties who willfacilitate the privileged use by a particular demandeur, the provision ofcircumvention services as opposed to the manufacture of devices is less likelyto implicate the copyright owners’ nightmare scenario.

Likewise, under the original Australian implementation of the WCT, thestatute allowed circumvention devices to be supplied to a beneficiary of anexception for a permitted use if the person making the privileged use providedthe supplier with a signed declaration to that effect.365 In any event, allowinga circumvention service provider to assist a particular user should be less prob-lematic.366

No predetermined single form of relief should be established. One size willlikely not fit all, given the wide range of uses that should be privileged. Yet,there may be circumstances when, under defined conditions, even the disclo-sure of the digital lock might be appropriate. One of the benefits of the fair usedoctrine has been its flexibility and its ability to adapt to changing circum-stances. The capacity of technology to effectuate a balance of rights, and whatthat balance should be, may well be very different in five years time. Bodiesestablished under Article 6(4) in the European Union, and courts in the UnitedStates under a reverse notice and takedown procedure, should remain free todevelop appropriate means to ensure the continued ability to engage in privi-leged uses.

Broader Perspectives and the Role of the Commission

The reverse notice and takedown procedure is precisely the type of conceptualapproach that is mandated, albeit in a narrow form, by Art. 6(4). A memberstate could implement the reverse notice and takedown procedure as a meansof fulfilling the obligations imposed by Art. 6(4). As a result of the Directive’sinadequate harmonization of exceptions and the opaque language of Art. 6(4)itself, it is unclear how many privileged uses are protected by Art. 6(4).367

Some countries have implemented Art. 6(4) without clear reference to specific


365 See Jeffrey Cunard et al., WIPO Standing Comm. on Copyright and RelatedRights, ‘Current Developments in the Field of Digital Rights Management’, WIPODoc. No. SCCR/10/2 (1 August 2003), available at http://www.wipo.int/documents/en/meetings/2003/sccr/pdf/sccr_10_2.pdf.

366 See Ginsburg, supra n. 14, at 17.367 See Copyright Directive Implementation Study, supra n. 11, at 169 (suggest-

ing revision of Art. 6(4) to ‘give protected status to those limitations that . . . reflectthe fundamental rights and freedoms enshrined in the European Convention on HumanRights, [and] those that have a noticeable impact on the Internal Market or concern therights of European consumers’).

limitations; others have explicitly singled out specific limitations as preservedby Art. 6(4) despite the application of TPMs.

The most that can be said with any confidence is that implementation inmember states has been inconsistent.368 But, even absent any further harmo-nization of different national choices, each member state could adopt the reversenotice and takedown procedure as a mechanism to preserve the precise range ofprivileged uses that the member state reads as permitted by the Directive.369

Even if the Commission might not look favourably on any effort to expandthe general norm of Art. 6(4) beyond the narrow context in which the Directivecurrently requires it, this would not preclude other countries from introducinga reverse notice and takedown procedure. To the extent that the US or the EUmight seek to repress such efforts through bilateral trade negotiations, Art. 6(4)shows that acting within the regime of DRM to protect uses privileged bytraditional copyright law is fully consistent with the WCT. If the EU can limitcopyright owners’ control as to some undefined exceptions, why could anothercountry not do so with respect to all exceptions traditionally protected bycopyright law and consistent with international copyright obligations?

Moreover, even within the EU, the Commission’s recently solicited reviewof the copyright acquis might provide an opening for some reform of existinglaw, including the expansion of the general principle contained in Art. 6(4).The reverse notice and takedown procedure discussed in this Article should begiven serious attention during the Commission’s review. At least, a PolicyStatement from the Commission acknowledging the ability of member statesto build upon the underlying norm of Art. 6(4), even beyond a strict reading ofthe text, might provide room for important procedural innovations in ways thattruly effectuate the values not only of the Directive but of the WCT that itclaims to implement.

CONCLUSION

By the end of the multilateral negotiations held at Geneva in 1996, the intensestruggle among stakeholders representing content providers, the telecommu-

368 See Marcella Favale, ‘Technological Protection Measures and CopyrightExceptions in EU27: Towards the Harmonization’, at 10 August 2007,http://www.law.-depaul.edu/institutes_centers/ciplit/ipsc/paper/Marcella_FavalePaper.pdf, at 22 (draft paper presented at Intellectual Property Scholars Conference)(‘Every country that decided to single out only some exceptions, picked from the list adifferent selection from that [in Art. 6(4)] of the Directive, and from that of the othercountries.’).

369 See supra n. 319 and accompanying text (making this point).


nications industry, online service providers, and the educational and scientificcommunities produced a workable compromise in the WCT. The importanceof preserving access to the copyrighted culture protected in cyberspace underthe new Treaty was expressly recognized in at least three important places:

(1) The broad preambular recognition of ‘the need to maintain a balance betweenthe rights of authors and the larger public interest, particularly education,research and access to information;’370

(2) The further express recognition, in Article 11, that the international standardfor reinforcing TPMs was not meant to entitle authors to ‘restrict acts, inrespect of their works, which are . . . permitted by law;’371

(3 And the express understanding in the Agreed Statement concerning Article10, which permitted contracting parties ‘to carry forward and appropriatelyextend into the digital environment’ existing limitations and exceptions intheir national laws and ‘to devise new exceptions and limitations that areappropriate to the digital network environment’.372

This historic compromise made it possible to establish a balanced legal infra-structure for worldwide networked communications of copyrighted works inthe digital environment.

Unfortunately, at the national implementation phase, the balance struck atGeneva gave way, in the US, to the one-sided provisions of the DMCA and, inthe EU to the only slightly less unbalanced approach of the EU Directive.While the DMCA formally acknowledged the need to preserve privileged usesin s. 1201(c), ss. 1201(a) and (b) have arguably separated access from privi-leged use and made it difficult, and under some interpretations impossible, toraise questions of privileged use once TPMs control access to copyrightedworks. The EU Copyright Directive took an equally tough approach to restrict-ing access through TPMs. Although the Directive generally invoked a need torespect exceptions and limitations in local law, it simultaneously limited thescope of the provision enabling such privileged uses.

The end result on both sides of the Atlantic has been the emergence of adistorted, unbalanced copyright regime in cyberspace with a growing chorusof complaints from educational, scientific, and other public interest users,among others, and a growing revolt against the legal restraints on legitimateuses of the copyrighted culture in some quarters. The abusive possibilitiesinherent in the DMCA’s access control provisions became dramatically visiblein the recent lock-out cases, where TPMs were used to perpetuate the kind of


370 WCT, supra n. 1, Preamble.371 Id., Art. 11.372 Agreed Statements, supra n. 2, statement concerning Art. 10.

‘fraud on the patent law’ that the Supreme Court had struck down in its 1880decision in Baker v Selden.373

Moreover, these extreme distortions of basic copyright principles mask themuch greater daily pressures that the DMCA puts upon the public interest usercommunity, which depends upon easy and continuous access to ideas, factsand other inputs to knowledge that copyright laws have never been allowed toprotect. Unless these distortions are remedied, a copyright system that wasdesigned to promote progress by expanding the outputs of literary and artisticworks could end by choking off access to essential inputs to the production ofknowledge as a global public good in the digital environment.

Our proposal for a reverse notice and takedown procedure – designed toreduce the tensions between access protection measures and privileged uses –attempts to rebalance the copyright equation in cyberspace before the damag-ing effects of overprotection give rise to systematic failure or breakdown.Among its many advantages in the US is the fact that it can be judicially devel-oped and applied on a case-by-case basis, with low transaction costs and rela-tively few risks to either side. It allows bona fide public interest users tocontinue their work without undue interference from TPMs and with thesupport of the content-providing industries themselves, who may verify thelegitimate uses being enabled and contest uses that seem to stretch the bound-aries of legally defined privilege. It builds on workable procedures that havealready proved their usefulness in the context of ISP liability, while enablingpinpoint litigation on borderline issues that all sides will want clarified. Thereis good reason to believe that industry itself might prefer a gradualist mecha-nism of this kind to more intrusive legislative measures with unknown futureconsequences.

If judicial experimentation with a reverse notice and takedown procedureproved unsuccessful for reasons we cannot foresee, it could be judicially aban-doned as easily as it had been adopted. If, instead, it proved effective, the endresults could eventually be codified both in the US and abroad on the basis ofthe experience gained in the meantime. In that event, our proposal would havehelped copyright law to regain its traditional balance in the digital environ-ment while implementing the true spirit of the historic compromise originallyembodied in the WIPO Copyright Treaty of 1996.


373 101 US 99 (1880).

ABC Startsiden 97–8advertising revenue 26, 61, 117–18, 121Africa, ‘making available’ rights 50–52Aldrich, N. 295allofmp3.com 31Altnet 121, 127–8Amstrad 17, 18, 39, 40, 122, 126, 210,

211anonymity and the Internet 214–22

ISP revealing subscriber details 214–16, 217

online liability, sharing out 219–22anti-circumvention provisions 241–2,

245, 246–54, 255, 269, 270, 274,276, 289

see also circumventing devicesantitrust laws 144, 145‘Anton Pillar’ order 120AnyDVD software 106Arctic Monkeys 196Armstrong, T. 231, 254Arriba 79, 84–7, 102Asia

broadband expansion 44–5‘communication to the public’ rights

50future of legislation 69‘making available’ right 49, 68see also individual countries

Atkin, L. 126Audible Magic 226audio fingerprint technology 58–9Austin, Graeme W. 123, 124–47Australia

authorization, three-part test for 17–18

authorizing copyright infringement 119–23, 125–30, 132, 204

circumvention devices 301‘communication to the public’

122–3contributory liability 122

Copyright Act 18, 22, 54, 95–6, 119, 120, 122, 125–6, 130, 131–2

Copyright (Digital Agenda) Act (2000) 17–18, 130, 131

extraterritorial acts of infringement 54, 130–33

file-sharing and filtering 31, 117, 119file-sharing liability 28–9, 31, 125–33Grokster and Australian law 211–13,

see also Groksterindirect liability theory 132ISP liability 208–11‘Join the Revolution’ movement 127links sites 23, 94–6‘making available’ rights 49, 52–4,

68, 132, 203music online and mobile sales 44third-party use and copyright 211and US Free Trade Agreement 54

‘authorization’ of infringementcopyright control versus

compensation 119–23and hyperlinks, indirect copyright

liability 94–6interpretation of tests for,

international developments 17,35, 36, 55–6, 120, 126, 204, 209, 210–11

online liability, sharing out 204, 210peer-to-peer global networks and

domestic laws, liability theories 125–30, 135–6, 137

three-part test see three-part test

Baidu 23, 60, 96–7Band, J. 262Bangladesh, ‘communication to the

public’ rights 50Barczewski, M. 286Baum, A. 183, 185, 186Beams, C. 240, 241Bechtold, S. 166, 175

305

Index

Belgiumfile-sharing and filtering 32–3future of legislation 70headlines as pointers 77, 78–9, 82hyperlinks and implied consent 87–8illicit content, hosting of links to

99–101links sites 23, 92

Benkler, Y. 231, 254, 278Bently, L. and B. Sherman 285, 287–8,

300Berne Convention 130–31, 135, 137,

145–6, 149–50, 159, 174, 190,264, 283

Article 2(2) 184–5Article 5(2) 176, 183, 184–6, 187,

188Article 5(4) 189Article 7 176Article 9 20, 161–2, 183Article 10bis (1) 187–8Article 13 160see also Internet copyright

infringements, international developments; TRIPS; WIPO

Bertelsmann 16, 207, 212Bhutan, ‘communication to the public’

rights 50Big Champagne 213–14bipolar copyright system for digital

network environment 148–95administrative compensation system

proposal 156–7and ‘P2P dark net’ 164‘anti-copyright’ models 153, 155–6Article 10 WCT, agreed statement to

174–5and Berne Convention 149–50, 159,

160, 161–2, 174, 176, 183, 184–6, 187–8

‘beyond copyright’ models 153, 156compulsory licensing, opt out scheme

158, 159–60, 163, 164, 166, 167, 168, 169, 170, 171, 173–4, 257–8

compulsory licensing, suggested 157–8, 180, 188–9

copyright management information 155–6, 157–8, 167

copyright and P2P networks 151–4

and copyright terms 179Digital Recording Act proposal 155and digital-rights management

(DRM) systems see digital-rights management (DRM) systems

exclusive rights under copyright 169, 170, 171, 173–4, 183

functioning of 175–92international copyright law 159–75,

176, 182–9international copyright law,

mandatory minimum rights 160–62

levy/tax system see levy/tax systemlicensing, individual, and levy

system, switching between176–81

mandatory remuneration rights proposals 154, 155–6

market solution, suggested 152–3and national copyright law structure

168, 169, 171, 186‘non-commercial use’ levy proposal

156–7, 159–60, 163–4, 166–9, 171, 173, 174, 177–81, 184, 186, 187, 190–91

non-voluntary licences and P2P file sharing 154–9, 163–4, 166, 172–4, 191–2

and P2P file sharing 149, 164, 168, 170–74, 178–81, 182–4, 186, 187, 191

preference-matching engines 177–8revenues for rights holders, lack of

153, 170, 177–8and small copyright owners 170,

177–8and streaming content 157–8, 166system complexity 175–6system shifting, one to the other

178–81technological tracking and

monitoring 155–6, 157–8, 166,167–71, 173, 182

three-step test see three-step testvoluntary collective licensing,

suggested 152–3see also copyright control;

technically protected copyrightworks


BitTorrent 3, 29, 30, 56, 224Blakeney 208Botswana, Copyright and Neighboring

Rights Act (2000) 51Boyle, J. 269Braun, N. 296, 300Brazil, file sharing jurisdiction 213broadband expansion 44–5Brown, M. 255Brunei, ‘making available’ right 49Bruno, A. 3BT 217, 219, 222, 225BT Cleanfeed 225Burk, D. 231, 254, 267, 276, 282, 293Burkina Faso, Law for the Protection of

Literary and Artistic Property 51

Cable and Wireless 223caching

and hyperlinks 87–8and online liability, sharing out

200–201and predicate act theory 137and technically protected copyright

works 237, 238Cambodia, ‘making available’ rights

49Canada

anonymity and the Internet, ISPrevealing subscriber details 214, 217

authorization of infringement 55–6, 204, 209, 210

Copyright Act 200–201embedded links and copyright

83–4intellectual property rights 216‘making available’ rights 20, 55–6,

200, 202, 203self-service photocopying of

copyright materials 55SOCAN (Society of Composers,

Authors and Music Publishers)83–4, 200–203, 211

Chander, A. 233, 290child pornography 225China

advertising revenue and online piracy61

broadband expansion 44–5

copyright and ‘assisting’ infringement96–7

Copyright Law 59, 60, 97deep linking of ISPs 60–61Internet Regulations 21, 60links sites 23, 96–7‘making available’ rights 59–60music delivery service and Yahoo!

China 23, 59–60, 96–7China Taipei see TaiwanChisum, D. 244circumventing devices

anti-circumvention provisions 241–2,245, 246–54, 255, 269, 270, 274, 276, 289

links to 104–7technically protected copyright works

246–54Clark, Bob 196–228Cohen, J. 231–2, 249, 254, 282Colombia, ‘making available’ right 49Com-Cem 95Comber, L. and O. Staple 220Commonwealth countries

‘authorization’ theory 17, 36, 126criminal law accomplice liability 18joint tortfeasor liability 18, 36statutory and common law rules

16–18third party, due care of 38–9vicarious liability 18see also individual countries

‘communication to the public’and hyperlinks 81and online liability, sharing out 199peer-to-peer (P2P) file sharing 46–7,

48–9, 50, 58, 64–8CompuServe 205, 235consumer protection 295contributory liability 15, 35–6, 63, 76,

102–3, 111–12, 114–15, 122, 204,209

Copiepress 78–9, 87copyright control

‘anti-copyright’ models 153, 155–6‘beyond copyright’ models 153, 156bipolar copyright system for digital

network environment seebipolar copyright system for digital network environment

Index 307

contributory liability 15, 35–6, 63, 76, 102–3, 111–12, 114–15, 122, 204, 209

copyright management information 155–6, 157–8, 167

direct copyright liability and hyperlinks 76–88

exclusive rights 169, 170, 171, 173–4, 183

inducement liability, US 15–16, 76, 135, 140, 204

and P2P networks 151–4small copyright owners and bipolar

copyright system 170, 177–8vicarious liability 15, 63, 76, 102,

204, 209see also bipolar copyright system for

digital network environment; peer-to-peer global networks and domestic laws, liability theories; peer-to-peer (P2P) file sharing; technically protected copyright works

copyright control versus compensationadvertising as inducement 117–18,

121‘authorizing’ infringement 119–23business plan dependent on

infringement 114, 118effective copyright protection 115end user infringement, evidence of

114films and sound recordings copyright

infringements 110infringement inducement elements

114–15, 116–17infringement-enabling virtues of

device, promotion of 114, 115–16

infringing uses, failure to filter out 114, 117

MP3 cases see MP3 casesrevenue security for copyright

holders 116, 118–19software copyright protection,

circumventing 112, 287‘substantial non-infringing use’

standard 112, 113–14, 115, 116–17

and technological advancement 110

copyright law‘anti-delegation’ architecture of 295author’s role in 142, 145–6and consumer protection 295and patent laws, links between

243–4secondary infringement 1–2, 3, 4–5,

7–8secondary infringement, and

hyperlinks 5, 71–109self-service photocopying of

copyright materials 55and Web 2.0 services 75, 77, 78see also individual countries

Corwin, P. and L. Hadley 155Creative Commons 265Creative and Media Business Alliance

221–2Cunard, J. 301

Davidson, D. 280Dawyndt, P. 265DeCSS 104–6, 251–2, 251, 279–80deep linking 60–61, 72, 73, 91–2, 108Denmark

Copyright Act 91ISPs and file sharing 222–3links sites 23, 91–2, 209‘making available’ right 204third-party injunctions on copyright

infringements 30, 31Desbois, H. et al. 164digital-rights management (DRM)

systems 148–9, 152–9, 165–6,174, 177, 178, 181, 183, 184

pay-per-use business models 168and technological protection 166,

167–71, 173, 182, 224see also bipolar copyright system for

digital network environmentDinwoodie, Graeme B. 229–304discovery of identity orders 218–22

see also anonymity and the InternetDixon, Allen N. 12–42Dogan, S. 110, 255dual-use technology

Sony safe harbour as default rule 242–6, 255

and threat to innovation 262–3, 268


see also technically protected copyright works

Dusollier, S. 231, 289, 296DVD Copy Control Association Inc. 104

E-Talk Communications 95–6Eckersley, P. 151, 153, 155, 159eDonkey 30Eechoud, M. von 135Einhorn, M. and B. Rosenblatt 193–4Electronic Frontier Foundation (EFF)

152, 153, 176, 191, 252, 253, 278,279, 282

embedded links 72, 73, 81, 108and royalties 83–4

EMI 59, 95, 199, 204, 217, 219eMule 61Epstein 176Europe

anti-circumvention rules 231–2, 233, 234, 246, 289

‘communication to the public’ right 48–9

Copyright Directive Implementation Study 286, 287, 289, 291, 297,299, 300, 302

copyright exclusivity 170cultural industries in Europe

resolution 70Data Protection Directives 221–2discovery of identity orders 218E-commerce Directive 2000/31/EC

14, 21, 32, 100, 107, 202, 205,206–7, 218, 222, 223, 224–5, 226, 227, 238

EC Directive 93/98, copyright term 179

EC Directive 96/9 (legal protection ofdatabases) 80

Enforcement Directive 2004/48 218, 221

illegal file sharing 45Information Society Directive 198intellectual property criminal-

enforcement directive proposal33

prescriptive parallelism in 285–8public interest uses of technically

protected content 231–2, 233, 234

reverse notice and takedown procedure 276, 283–303, 290–96

Safe Harbour Agreement 220, 226, 238

Software Directive 289technical protection and copyright

owners 252Telecommunications Data Protection

Directive 220third-party copyright liability

legislative trends 33, 204TRIPS Agreement arrangement with

US 150–51see also individual countries

Europe, Copyright Directive 19, 30, 32,48, 81, 89, 166, 170, 194, 198,215, 232, 233, 234, 278, 299, 303

Europe, Copyright Directive, Article 6(4)106, 231, 283–303

and classes of work 292–4and copyright exemptions 299–300limitations of 287–9and privileged uses 294, 295–300relief, developing appropriate forms

of 296–300reverse notice and takedown

application 290–95and technically protected copyrighted

works 283–303triggering entitlement to relief 291–3unfulfilled normative commitment

underlying 284–9voluntary arrangements, encouraging

proper role of 293–6Europe, Copyright Directive,

Implementation Study 286, 287,288, 291, 297, 299, 300, 302

Europe, E-commerce Directive 48pre-Directive European case law

207–8European Convention on Human Rights

(ECHR), Article 10 (freedom ofexpression) 74, 79, 99

European Free Trade Area (EFTA)289–90

Everlasting 29exclusive rights

copyright 169, 170, 171, 173–4, 183and levy/tax system, opting out of

187

Index 309

extraterritorial reach of copyright law54, 130–40

see also territorialityEzPeer 27, 61, 62

Facebook 197FastTrack 2Favale, M. 299Federation Against Software Theft

(FAST) 222Fernando, G. et al. 268Ficsor, M. 46, 48, 50, 162, 163, 164,

165, 168, 170, 172, 174, 175, 195Fiji, ‘communication to the public’ right

50File Rogue 57films

child pornography 225 copyrighted, and hyperlinks 104–6and sound recordings copyright

infringements 110to DVD, speeding up transfer 69

filteringgold file flood 52infringing uses, failure to filter out

114, 117Internet copyright infringements,

international developments 30–33, 117, 119, 279

technology 26–7, 28–9, 31, 32–3, 38–9, 58–9, 117, 119, 129, 144

financial benefit see revenuefirewalls 220Fisher, W. 148, 149, 152, 156–8,

159–60, 172, 174, 181, 182, 184,189, 190, 191, 192, 258

5fad 604FO AG 178framing 72, 73, 81–3France

Copyright Act (2006) 7, 219copyright law amendments (2006)

33–4copyright law and consumer

protection 295copyright infringement 199, 207–8Data Protection Authority 219digital sales, low, and unauthorized

file-sharing 70films to DVD, speeding up transfer

69

future legislation 69, 70identity orders 219‘licence globale’ 7music, DRM-free tracks 69Olivennes Report and illegal file

sharing 69search engine with links to illicit

content 103–4third-party copyright liability

legislative trends 30, 33–4Frankenstein defence 40freedom of expression 79, 105–6

see also headlines as pointersFreenet 57

Ganley 208Garnett, K. et al. 18Garnett, N. 295Gathem, G. and A. Strowel 99Geiger, C. 154–5, 164, 173Gendreau, Y. 126Germany

Civil Code (Article 830) 107Copyright Act 106, 287Copyright Administration Law

188copyright and ‘all rights reserved’

clause 188copyright law and consumer

protection 295copyright limitation and Berne

Convention 150copyright and thumbnail

reproductions 87disturbance liability 106–7file sharing jurisdiction 213, 221ISP liability pre-European Directive

207levy for private copying, future of

192, 194links to circumventing devices

106–7music file-sharing 20privacy issues 221Telemedien law 107third parties, injunctive relief against

(stôrerhaftung) 19, 30Gervais, D. 149, 151, 152, 162, 163,

165, 171, 172, 184, 186, 188, 199,203


Ginsburg, Jane C. 82, 110–23, 137, 141,149–50, 162, 164, 166, 172, 232,250, 253, 254, 268, 275, 278, 280,294, 301

Gnarls Barkley, Crazy 196Goldstein, P. 125, 158, 189, 194Google 23, 76, 87–8, 96, 101–4Google.News 75, 76, 78–9Greece, technological protection

measures 299Griffin, J. 155Griffiths, J. and U. Suthersanen 99Grokster 1, 2, 6, 15–16, 31, 33, 35–6,

38–41, 62–4, 102, 110–11,113–22, 125, 133–5, 137, 140–44,146–7, 152–3, 166, 177, 179–80,182, 193–4, 204, 208–9, 244, 246,255–8, 260–67, 283 (see alsoindividual cases in Table of Casesfor breakdown)

Guibault, L. 155, 173

Hanley, Vicky 71–109Harris, E. 212Hartwig, H. 19headlines as pointers 76–9, 82–3

and freedom of expression 79, 105–6news reporting exceptions 78–9see also pointers

Henry 224Herman, B. and O. Gandy 250Higgins, R. 144, 145, 147Hilty, R. 179Ho, J. 61Hof, R. 260Hoffmann, W. 186, 188Högberg, S. 114, 121, 208Hong Kong

Copyright Ordinance Section 26 49–50, 56

‘making available’ right 49–50, 56‘seeding’ files and ‘swarm’ groups

56Hugenholtz, B. 19, 286, 287, 289Hugo and Hugot 219Hyland, A. 208, 211hyperlinks

automatic link 73, 74collection of unprotected 79–80and ‘communication to the public’ 81

copyright liability, caused by content of linked site 88–107

and copyrighted films 104–6deep linking 60–61, 72, 73, 91–2,

108direct copyright liability, cases

involving 76–88direct and indirect copyright

infringement 75–6directories and copyright protection

80dual character of linking as technique

and form of expression 72–4dynamic link 73embedded links 72, 73, 81, 83–4,

108external 74framing 72, 73, 81–3headlines as pointers see headlines as

pointershosting ISP liability 75, 200, 208HREF link 72HTML code 72, 73illicit content, hosting of links to

98–101index comparison 80infringements involving linking

techniques and processes 80–84

internal 73–4intra-page 73liability for copyright infringement

76linking as form of expression 74linking to file-sharing programs 97–8links to circumventing devices 104–7moral rights, protection of 81–3MP3 files see MP3 filesand online intermediaries 75–6operators and copyright infringement

75photographs see photographspointers see pointersand posting of URL addresses 89protected articles and cache copies

87–8search engine with links to illicit

content 101–4search engines and copyright

protection 80, 84–8, 93–4, 96–7, 100–104

Index 311

surface linking 72techniques for linking 72–4third-party liability for ’links’ sites

22–4, 54

India, ‘making available’ right 49Indonesia, ‘making available’ right 50,

51innovation threat, and dual-use

technology 262–3, 268intellectual property

criminal-enforcement directive proposal, Europe 33

Intellectual Property and the NationalInformation Infrastructure White Paper, US 234–5, 236, 237, 241, 242, 245–8, 276

liability theories, de jure 134–40, 143and online liability, sharing out 216

international copyright law 159–75, 176,182–9

mandatory minimum rights 160–62International Federation of the

Phonographic Industry (IFPI)20–21, 23, 27, 28, 29, 30, 31, 44,59, 61, 69, 74, 80, 89, 90–91, 92,97, 99–101, 196, 213, 219, 223,261

Internet copyright infringements,international developments 12–42

ability to prevent or deter third party 38, 39

and advertising 26, 61, 117–18, 121‘authorization’, interpretation of tests

for 35, 55–6common elements, consistent

application of 37–40common law and civil law rules

15–19copyright liability to online activities,

application and limitations of 19–33

copyright liability to online activities,future cases, factors for 35–7

copyright liability to online activities,solutions 35–41

cost-benefit analysis 39–40definitions of terms 13–15defunct defences 40–41

Einstein defence 40extent of infringement 38extent of third party’s involvement

37, 39filtering technologies 26–7, 28–9,

30–33, 38–9, 117, 119, 279financial benefit of third party 38, 39,

40, 76, 102Frankenstein defence 40incentives to cooperate with

copyright holders 240knowledge of infringing activities 37,

39, 52, 76, 106‘knowledge’, interpretation of

elements of 37, 39Land-of-Far-Far-Away defence 41legislative trends 33–5liability of file-sharing services

24–9relationship of third party with user

37, 39Scintilla defence 41search engine with links to illicit

content 103–4search engines and copyright

protection 80, 84–8, 93–4, 96–7, 100–104

self-regulation, suggested 236statutory exemptions 21–2third party, due care of 38–9, 76third-party liability 21–33, 39third-party liability for ‘links’ sites

22–4, 54user liability 19–21Wink-Wink defence 41see also Berne Convention; online

liability, sharing out; TRIPS Agreement; WIPO

Irelandauthorization of infringement 204copyright infringement provisions

203–4, 206Data Protection Acts 1988–2003

215–16, 219file sharing jurisdiction 214ISPs and file sharing 215–17, 219,

221Norwich Pharmacal file-sharing

decision 215–17, 219, 223


Postal and Telecommunications Services Act (1983) 215, 219

privacy issues 219, 220, 221replication as infringement 199

ItalyISP disclosure orders 218music online and mobile sales 44

iTunes 260–61, 263

Jacover, A. 153, 156Jaisingh, J. 177Japan

Copyright Law 25, 57‘File Rogue’ case 57file-sharing services liability 25‘making available’ right 49, 57mobile music piracy 44–5reverse takedown and notice

approach 283Japan MMO 25

Kabat, A. 154, 156Kaplan, B. 273Kazaa 2, 16, 24–5, 28–9, 31, 37, 39, 41,

52–3, 66, 67, 98, 113, 117,119–21, 124, 126–30, 143–4, 147,209, 211–12, 214, 227

Kennedy, G. and S. Doyle 27Koelman, K. 19, 165, 168Koneru, P. 136Koopa 197Korea

‘communication to the public’ rights 58

Copyright Act (2006) 34, 58, 59Copyright Act, proposed Amendment

to Enforcement Decree 34file-sharing services liability 25–7KOMCA (Korean music publishers’

society) 26‘making available’ right 49, 50, 57–9MP3 files in shared folders 58–9third-party copyright liability

legislative trends 34Kugoo 61Kur, A. 194, 195Kuro 27–8, 61–2Kuwait, ‘making available’ right 49

Laddie, H. et al. 17, 36, 127

Land-of-Far-Far-Away defence 41Landes, W. and R. Posner 176Laos, ‘making available’ right, lack of

50Lardner, J. 242, 245, 258Latin America, broadband expansion

44–5Latman & Tager 111Lemley, K. 240Lemley, M. and R. Reese 153–4, 155,

159, 176, 177, 180, 255, 257, 258,259, 262, 266, 268

Lessig, L. 110, 149, 154, 157, 158, 159,164, 176, 177, 179, 193, 195, 262

levy/tax system, opt-in mechanism 187,190–92

compared to collective licensing 191–2

features and benefits 190–91and liability rules 192licensing, individual, and levy

system, switching between 176–81

‘non-commercial use’ levy proposal 156–7, 159–60, 163–4, 166, 167, 168–9, 171, 173, 174, 177, 178–9, 180–81, 184, 186, 187, 190–91

private copying, future of 192, 194levy/tax system, opting out of 181–90

‘all rights reserved’ clause 188compliance with international

copyright law 182–9and exercise of exclusive rights 187features and benefits 181–2see also bipolar copyright system and

digital network environmentlicensing

collective, compared to levy/tax system 191–2

compulsory licensing, opt out scheme158, 159–60, 163, 164, 166, 167, 168, 169, 170, 171, 173–4, 257–8

compulsory licensing, suggested 157–8, 180, 188–9

Creative Commons 263individual, and levy system,

switching between 176–81

Index 313

non-voluntary, and P2P file sharing 154–9, 163–4, 166, 172–4, 191–2

voluntary collective, suggested 152–3Lichtman, D. and W. Landes 244, 260Liebowitz, S. 152Lincoff, B. 155Linux 104Lipton, J. 232, 252, 253, 275, 276,

279–80Litman, J. 118, 123, 158, 160, 172, 180,

181–2, 183, 184, 185, 188, 189,235, 243, 244, 258

Liu, J. 281lock-out technology cases 269–76, 279,

295, 297, 300broader implications of 274–6and replacement parts and repairs

256–7Lunney, G. 155, 159

McClure, S. 97Macedonia, ‘making available’ right 49McGrath 220‘make-a-tape’ case 111–12‘making available’ right

implementing, peer-to-peer (P2P) filesharing 45, 52–68, 200, 202, 203

online liability, sharing out 203–4Malaysia, ‘making available’ right 49Marsland, V. 77Masouyé, C. 164, 165, 185, 189MediaSentry 67, 219–20Melichar, F. 188Menell, P. and D. Nimmer 244‘mere conduit’ providers 21, 32, 202,

206, 224, 225, 226Merges, R. 192Mexico, file sharing jurisdiction 213Microsoft 138, 226Molina, M. 60Mongolia, ‘communication to the public’

rights 50Moorhouse 17, 39, 127, 210, 212Mormon Church 89, 90Morpheus 113MP3 files

‘assisting’ infringement 96–7‘authorizing’ infringement 94–6

copyright control versus compensation 112–13

direct access to files 93illicit content, hosting of links to

99–101linking to file-sharing programs

97–8links to copyrighted file 89–97, 129links to copyrighted files 91–2, 93–7,

209monitoring volume use 21, 219–20in shared folders 58see also music

MP3.com 62, 63MP3s4free.net 54, 96, 129, 208Mulligan, D. and A. Perzanowski 281Muper 61music industry

copyright infringement, early instance of 63

DRM-free tracks 69file-sharing 20–21, 208, 212–13,

257–8, 260–61, 263films and sound recordings copyright

infringements 110illegal file sharing, peer-to-peer (P2P)

file sharing 44mobile music piracy 44–5and online liability, sharing out

196–7online music sales, rise in 44see also MP3 files

Myanmar, ‘making available’ right, lackof 50

MySpace 197, 226

Nadel, M. 153Napster 2, 6, 16, 22, 31, 58, 62, 63, 66,

103, 112–14, 208, 209, 211, 245,255, 258–61, 263–5, 267, 283

Nepal, ‘making available’ right 50Netanel, N. 123, 152, 154, 156, 159,

160, 167, 168, 170, 173, 174, 191,258

NetherlandsCivil Code 99, 218Copyright Act 94discovery of identity orders 218, 220,

221file-sharing services 24–5, 29, 37


illicit content, hosting links to 98–9ISPs and file sharing 222links sites 24, 93–4, 209third-party copyright liability

legislative trends 33, 214networking sites 197, 226, 240New Zealand

‘authorizing’ infringement 120, 210–11


Copyright Act (1994) 120Nimmer, D. 244, 248, 275Nimmer, M. 273Nordemann, W. et al. 183, 184, 185Norway

Copyright Act 93downloading for private use 93linking to file-sharing programs

92–3, 97–8‘making available’ right 204

Oberholzer, F. and K. Strumpf 152Oman, ‘making available’ right 49online liability, sharing out

anonymity and the Internet 214–22anonymity and the Internet, ISP

revealing subscriber details 214–16

Australian cases and European counterparts 208–11

authorization of infringement in common law 204, 210

and caching 200–201cease and desist case law 223civil liability for online transmissions

204–6and communication to the public

199copyright board and appeal court

decisions, and SOCAN (Canada) 83–4, 200–203, 211

and data protection 215–16defamation actions prior to E-

Commerce Directive 205discovery of identity orders, some

European decisions on 218–22

E-Commerce Directive see underEurope

file sharers and personal liability 213–14

file-sharing phenomenon 196–8, 200–211, 222–7

and firewalls 220Grokster and Australian law 211–13,

see also Groksterand intellectual property rights

216Irish Norwich Pharmacal file-sharing

decision 215–17, 219, 223ISP immunity in UK law, weakening

of 224–6ISP liability 200–203, 205–12key copyright concept 198–9‘making available’ right 203–4and ‘mere conduit’ defence 21, 32,

202, 206, 224, 225, 226MP3 files, monitoring volume use 21,

219–20and music industry 196–7networking sites and file sharing 197,

226, 240and online child pornography 225privacy interest 219–22privacy interest and criminal

procedure for disclosure of personal data 220–22

and royalties payments 200SABAM v Scarlet decisions 226–7SOCAN in the Supreme Court of

Canada 83–4, 201–3, 211and supernodes 211–12technological solutions 212, 224–7and third party infringement

200–201, 206, 211UK and Irish law, relevant

infringement provisions 203–4see also Internet copyright

infringements, international developments

Onsrud, H. and J. Campbell 263

Pakistan, ‘communication to the public’rights 50

Panama, ‘making available’ right 49Papua New Guinea, ‘making available’

right 49patent law restrictions, and technically

protected copyright works 275–6

Index 315

peer-to-peer global networks anddomestic laws, liability theories

and antitrust laws 144, 145authorizing copyright infringement

125–30, 135–6, 137author’s role in copyright law 142,

145–6caching and predicate act theory 137export of intellectual property

liability theories, de jure134–40, 143

export of liability theories, de facto140–42


filtering technology see filteringglobal implementation of WCT,

Article 8, and WPPT, Article 15 49–52

Grokster across borders 133–42, see also Grokster

indirect liability theory 132and inducement principle 135, 140and international copyright law see

international copyright lawmonitoring search requests 127–8patent and trademark laws, territorial

reach of, US 137–40‘predicate act’ theory 131, 136–7public and private international law

144–6and technology-friendly policies

141–2, 147territoriality and national treatment

145–6territoriality, toward a principled

departure from 143–6see also copyright control

peer-to-peer (P2P) file sharingaudio fingerprint technology 58–9and broadband expansion 44–5‘communication to the public’ see

‘communication to the public’deep linking of ISPs 60–61extraterritorial acts of infringement

54, 130–40failure to take action to curtail file

sharing 52file sharing definition 14–15financial benefits from infringement

see revenue

future of legislation 68–70and link sites see hyperlinks‘making available’ right see ‘making

available’ rightMP3 files see MP3 filesmusic industry see musicPotato System 178‘seeding’ files and ‘swarm’ groups 56supernodes 64, 211–12US and EU implementation

compared 47–9see also copyright control

Peitz, M. and P. Waelbroeck 152Penalver, E. and S. Katyal 295Perfect 10 16, 22–3, 67, 87, 96, 101–4,

239Perzanowski, A. 253, 254, 280, 281Peukert, Alexander 2, 148–95Philippines, ‘making available’ right 49,

50photographs

child pornography 225and ‘fair use’ exception 85, 102and model’s personality rights 82and online reproduction consent 87–8in thumbnail format 84–7, 101–4

pointers 72, 75, 107–8collection of unprotected hyperlinks

79–80as copyrighted elements 76–9and direct copyright liability 84–7and ‘fair use’ exemption 84–7headlines as see headlines as pointersinfringements relating to 76–80and linking techniques, infringements

involving 84–8visual material as 79see also hyperlinks

Polandfile sharing jurisdiction 213music file-sharing 21

Portugal, file sharing jurisdiction 213Potato System 178Powell, G. 60‘predicate act’ theory 131, 136–7preference-matching engines 177–8prescriptive parallelism, Europe 285–7privacy issues see anonymityProlok 245Prosperetti 218, 227


public interest user groupsof technically protected content

231–2, 233, 234, 263–9under DMCA, section 512,

facilitating 264–6under DMCA, section 1201,

frustrations of 266–9, 270, 271–3, 276–7, 281, 292

Radiohead, In Rainbows 197Ramkey 245Reese, R. 252, 254Reichman, Jerome H. 229–304Reinbothe, J. 298, 300Reinbothe, J. and S. von Lewinski 161,

162, 163, 165, 173, 175, 194revenue

advertising 26, 61, 117–18, 121financial benefit from infringement,

and peer-to-peer file sharing 54

financial benefit of third party 38, 39,40, 76, 102

and mandatory rights proposals 154, 155–6

for rights holders, lack of, and bipolarcopyright system 153, 170, 177–8

royalties 83–4, 200and security for copyright holders

116, 118–19reverse notice and takedown framework

case-by-case approach 281–3Europe, Copyright Directive, Article

6(4) 276, 290–95illustrative applications 278–81as mode of implementing Article 6(4)

of EU Copyright Directive 283–303, 290–96

suggestions 255–83to enable public interest uses of

229–304Richardson 219Ricketson, S. 146, 161, 162, 163, 164,

165, 170, 172, 173, 174, 175, 183,184, 185, 186, 187, 188, 189, 190

Rieber-Mohn, T. 289, 294Rohleder, B. 192Röthlisberger, E. 185, 186royalties 83–4, 200

RTC 237Russell, M. 59Russia, file-sharing 31Rustad, M. and T. Koenig 241

SABAM 32–3, 70, 227Sadd, T. 232, 278safe harbours

and anti-circumvention rules 230, 232–52, 259

and anti-circumvention rules, checks and balances in 234–54, 259, 260, 262, 263, 266

provisions 235–41, 301Safe Harbour Agreement, Europe

220, 226, 238Safe Harbour Agreement, US 220

Salow, H. 240Samoa, ‘making available’ right 49, 50Samuelson, Pamela 142, 229–304Santa Cruz, M. 289–90Scarlet (Tiscali) 32–3, 222, 223, 224,

226–7Schlesinger, Michael 43–70Schönherr, F. 183, 188Science Commons 263Scientology, Church of 98–9Scintilla defence 41Sciorra, N. 245‘seeding’ files and ‘swarm’ groups 56Seeqpod 3Seff, A. 263Senftleben, M. 159, 162, 163, 164, 165,

166, 172, 173, 195Seoul Records 59Sharman 6, 22, 28–9, 31, 38, 39, 40, 41,

52–3, 111, 117, 119–21, 124, 126,127–8, 143–4, 147, 212–13, 214

Shetland Times 77, 82Shih Ray Ku, R. 148, 153, 155, 156,

159, 259Singapore, ‘making available’ right 49Sirinelli, P. 150, 170, 175, 194SK Telecom 9Skylink 271, 272Skynet 99–100Sobel, L. 153, 155, 159, 166, 167software

copyright protection, circumventing 112, 286

Index 317

EU Software Directive 289Federation Against Software Theft

(FAST) 222Sohu/Sogou 60Sony 6, 15, 39, 40, 59, 95, 112–22, 135,

140–43, 211, 212, 236, 242–8,259–63, 273, 281, 295

Soribada (Asia Media) 25–7, 39, 41,57–9

Spada, P. 287Spain

privacy issues 221third-party copyright liability

legislative trends 33Speer, L. 10Sri Lanka, ‘making available’ right 49,

50Steinhardt, R. 144Sterling, J. 19Story, A. 144Streamcast 1, 16, 64, 115, 212, 261–2streaming 157–8, 166Streaming Media 149, 153Strowel, Alain 1–11, 71–109, 123Subafilms 54, 134–5, 136, 145Sun Microsystems 266supernodes 64, 211–12Swaziland, ‘making available’ right 49Sweden

copyright law 90future of legislation 69–70links to copyrighted files (MP3 cases)

89–91, 209Renfors Report, infringement

disconnection 69–70Sydnor II, T. 65

TaiwanCopyright Law 50, 62Copyright Law amendment 34–5file-sharing services 27–8‘making available’ right 49, 61–2‘public transmission’ right 50third-party copyright liability

legislative trends 34–5Tanzania, Copyright and Neighboring

Rights Act (1999) 51Tariff 22 case 83–4taxation see levy/tax systemtechnically protected copyright works

anti-circumvention provisions 241–2,245, 248–54, 256, 269, 270, 274, 276, 289

and caching 237, 238circumvention and public interest

uses, regulation of 248–54competitive uses of non-

copyrightable products 274–5Computer History Museum example

280copyright and patent laws, links

between 243–4counter-notice regime 239, 240and digital-rights management

(DRM) systems 166, 167–71, 173, 182, 224

dissemination technology cases 255, 257–63

dual-use technologies, Sony safe harbour as default rule 242–8, 255

dual-use technology and threat to innovation 262–3, 268

DVD clips example 279–81electric fencing 267, 271and Europe, Copyright Directive,

Article 6(4) 283–303ISP incentives to cooperate with

copyright holders 240ISP safe harbours see safe harboursISP self-regulation, suggested 236liability theories 141–2, 147library filters example 278–9and LOC (Librarian of Congress)

rulemaking procedure 250, 252–4, 280

lock-out technology cases see lock-out technology cases

online liability, sharing out 212, 224–7

P2P file sharing and secondary liability 258–9, 264–6

and patent law restrictions 275–6and prescriptive parallelism 285–7public interest implications 263–9public interest user groups see public

interest user groupsregulation of 248–54replacement parts and repairs and

lock-out codes 256–7


reverse notice and takedown regime see reverse notice and takedown regime

and safe harbours see safe harbourssecurity research example 281site monitoring 127–8, 155–6, 157–8,

166, 167–71, 173, 182, 239, 240

technically protected works, public interest exceptions 250

see also bipolar copyright system for digital network environment; copyright control

Techno Design 24, 93–4, 210, 220, 222,224

Telewest 222territoriality


and national treatment 145–62toward a principled departure from

143–6Thailand


‘making available’ right 49The Crimea, Secrets of the Witching

Hour 197third party

copyright liability legislative trends 33, 34–5, 204

due care of, and Internet copyright infringements, international developments 38–9, 76

financial benefit of, and Internet copyright infringements 38, 39, 40, 76, 102

infringement, and online liability, sharing out 200–201, 206, 211

injunctive relief against (stôrerhaftung), Germany 19

liability, Internet copyright infringements, international developments 21–33, 39

three-step test 17–18, 159, 161, 162–74, 184, 186, 187, 190

conflict with normal exploitation 164–72

market displacement following restriction 165–6

special cases 162–4unreasonable prejudice to the

legitimate interests of the rights holder 172–4

thumbnail format, photographs in 84–7,101–4

Tiscali 32–3, 222, 223, 224, 226–7TopSearch 31, 53, 127–8TRIPS Agreement 149–51, 159, 162,

163, 170, 190, 194Article 9(1) 183Article 12 176Article 13 160, 161, 175dispute settlement procedures 150see also Berne Convention; Internet

copyright infringements, international developments; WIPO

2channel 57

UKanonymity and the Internet, ISP

revealing subscriber details 214–15

authorization of infringement 17, 84, 120, 126, 127, 204, 209

British Phonographic Industry (BPI) 223

cassette duplication equipment 17, 126

cease and desist case law 223Copyright Act (1911) 17, 200, 204,

209Copyright Act (1956) 17, 200Copyright, Designs and Patents Act

(1988) 17, 77, 120, 206copyright infringement provisions

203–4Defamation Act (1996) 205, 206defamation actions prior to E-

Commerce Directive 205and EU Software Directive 289extraterritorial reach of copyright law

132, 133file sharing jurisdiction 208, 213, 222future of legislation 69–70Gowers Report 69–70, 225headlines as pointers 76–7Internet Watch Foundation (IWF) 225ISP immunity, weakening of 224–6

Index 319

music file-sharing 20online child pornography 225Personal Internet Security, House of

Lords report 225privacy issues 219, 220, 222Regulation of Investigatory Powers

Act (2000) 220reverse notice and takedown

procedure and classes of users 292, 297–8

Ullrich, H. 145Universal Music 6, 16, 22, 23, 28–31,

38, 40–41, 52–4, 59–60, 68, 94–6,99, 111, 117, 119–21, 124–30,143–4, 147, 208, 211–14, 220,227

Urban, J. and L. Quilter 240US

anti-circumvention rules 230, 231–2, 233–5, 236, 237, 241, 242, 245, 248–54, 256, 269, 271, 274, 276

antitrust law 144, 145Australia Free Trade Agreement 54authorizing copyright infringement

135–6, 137cable subscription services and ‘near-

on-demand’ forms of broadcasting and communication 51

common law copyright and tort principles 15–16

‘communication to the public’ 122, 236–7

Communications Decency Act (CDA)205–6, 236

contributory liability 15, 35–6, 63, 76, 102–3, 111–12, 114–15, 122, 204, 209

Copyright Act 48, 51, 64, 65, 80, 85, 87, 116, 125, 135, 141, 162, 163, 164, 165, 167, 170, 194, 232, 267, 268, 272

copyright balance, search for 148copyright exclusivity 170copyright law 3, 32, 122, 184, 205Digital Millennium Copyright Act

(DMCA) 48, 100, 105–6, 230, 231, 232, 233–4, 237, 238–41, 245, 246, 250–53, 254, 255–6, 259, 278, 283, 291, 292, 303–4

Digital Millennium Copyright Act (DMCA), s. 512 265–6

Digital Millennium Copyright Act (DMCA), s. 1201 266–9, 270, 271–3, 276–7, 281, 293

‘ distribution’ model of copyrighted works 47, 64–8

export of intellectual property liability theories, de jure134–40

export of liability theories, de facto140–42

extraterritorial reach of copyright law54, 131, 133–40

‘fair use’ exception 85, 104file-sharing services liability 35–6,

38–9, 209, 258–9, 264–6film industry and links to

circumventing devices 104–7films and sound recordings copyright

infringements 110–11Free Trade Agreements 49, 54future of legislation 69hyperlinks and copyright 80, 81, 88,

89‘Induce Act’ proposal 33inducement liability 15–16, 76, 135,

140, 204Intellectual Property and the National

Information Infrastructure White Paper 234–5, 236, 237, 241, 242, 245–9, 276

ISP self-regulation, suggested 236Lanham Act 139library filters 276–7LOC (Librarian of Congress)

rulemaking procedure 250, 252–4, 280

‘making available’ right 47–8, 54, 62–8, 68, 205, 245–6

Motion Picture Association of America (MPAA) 3

music downloading, copyright infringement 63

music online and mobile sales 44Patent Act 125, 138–9patent and trademark laws, territorial

reach of 137–40‘predicate act’ theory 131, 136–7privacy issues 236


‘publication’, definition of 64, 65–6reverse notice and takedown

procedure 278–9Safe Harbour Agreement 220safe harbours provisions 235–41,

259–60search engine with links to illicit

content 101–4secondary liability 111–19, 209‘substantial non-infringing use’

standard 112, 113–14, 115, 116–17

technically protected works, public interest exceptions 250

technology-friendly policies 141–2telecom industry, immunity from user

wrongs 235–6, 239temporary copies of files and

predicate act theory 137third party, due care of 38–9third-party copyright liability 33, 76TRIPS Agreement arrangement with

EC 150–51vicarious liability 15, 63, 76, 102,

204, 209video tape recording 112WIPO Copyright Treaties

Implementation Act 249Usenet 205, 237

Van der Laan, K. 218vicarious liability 15, 18, 63, 76, 102,

204, 209Vienna Convention on the Law of

Treaties 162, 169, 189Vietnam, ‘making available’ right 49,

50Voelzke, J. 205von Lewinski, S. 155, 161, 162, 163,

165, 173, 188, 189, 194, 198Von Lohmann, F. 113, 262

Wandtke, A.-A. 154Wang Qian 97Warner Music 3, 16, 59Weatherall, K. 147Web 2.0 75, 77, 88Weinreb, L. 273Westkamp, G. 107, 288Wilco 180

Wink-Wink defence 41Winny 57WIPO, see also Berne Convention;

Internet copyright infringements,international developments;TRIPS

WIPO, Copyright Treaty (WCT) 20, 21,45, 149–50, 159, 183, 229–30,237, 248, 264, 268, 290, 294, 295,301, 302, 303–4

WIPO, Copyright Treaty (WCT), Article8

‘making available’ right 45, 48, 173, 174, 183, 190, 198, 199, 202, 203

‘making available’ right, global implementation of 49–52, 56, 62, 64, 81, 130–31, 166–7

WIPO, Copyright Treaty (WCT), Article10, tree-step test 167–8, 173,174–5, 198, 229

WIPO, Copyright Treaty (WCT), Article11, mandatory protection oftechnological measures 167–8,170, 171, 173, 230, 283

WIPO, Copyright Treaty (WCT), Article12, mandatory protection of rightsmanagement information 167,170, 171

WIPO, Copyright Treaty (WCT), Article14 198

WIPO, Diplomatic Conference (1966),‘distribution’ and‘communication’ models 46–7,51, 199

WIPO, Performances and PhonogramsTreaty (WPPT) 20, 21, 45–6

cable subscription services and ‘near-on-demand’ broadcasting and communication 51

WIPO, Performances and PhonogramsTreaty (WPPT), Articles 10 and14

‘making available’ right 45–6, 47, 48,160, 161, 166–7

‘making available’ right, global implementation of 49–52, 56, 62, 64

‘making available’ right, incomplete solutions and treatment of related rights 50–52

Index 321

Wittgenstein, P. 154WTO

dispute settlement system 150, 183TRIPS see TRIPS

Wu, T. 241

Xunlei 60–61

Yahoo! China 23, 59–60, 96–7Youdu 60–61YouTube 240

Zimmerman, D. 253Zittrain, J. 225


Documents

Peer-to-Peer File Sharing and Secondary Liability in Copyright Law, Edward Elgar, 2009, 321 p